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In financial trouble, Spain prepares for an election
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STEVE CHIOTAKIS: Spain is preparing to vote for a new government this weekend. It’s the latest eurozone country to feel the pressure from the bond markets. Yesterday Spain had to pay its highest bond yield since 1997– dangerously close to the 7 percent interest rate that indicates investors may not have confidence that Spain will repay its debts.
The BBC’s Sarah Rainsford is with us from Madrid, good morning Sarah.
SARAH RAINSFORD: Good morning.
CHIOTAKIS: How does this election play into the economic situation there?
RAINSFORD: It’s hugely important. The economy is really the only issue anyone’s been talking about. All the candidates and whole of Spanish society wanting to know how this general election can change a very dire situation in Spain, where almost five million people are unemployed and in some parts of the country more than 50 percent of the young workforce is out of work. So very difficult situation and absolutely critical for solving Spain’s problems.
CHIOTAKIS: And we’ve also seen the rate — the interest rate for Spain to borrow — going up and up. What does that mean?
RAINSFORD: Well it means that whoever is in power after this election will have a huge task on its hands, a really big challenge, to convince investors, to convince the finacncial markets, that Spain is solvent, that it can pay back its debts, and to bring those borrowing costs down to a sustainable level. Now what we’re expecting is to see huge austerity measures here, a lot more spending cuts — particularly in the public sector. And I think what means is we’re going to see a lot of social unrest here as people are going to be very, very unsatisfied that things are already difficult and they’re going to get much tougher.
CHIOTAKIS: Yeah, social unrest. I mean, what are the people on the streets of Madrid and elsewhere thinking in Spain about of all this?
RAINSFORD: Well, there’s a mixture. I mean, you have to take into account that it looks like the popular opposition party — a center-right party — is going to win by a landslide, so there’s a lot of support for tough measures for what people see here as a safe pair of hands to take over the government. But on the other hand, there’s a lot of more traditional left-wing voters who are extremely worried.
CHIOTAKIS: The BBC’s Sarah Rainsford in Madrid. Sarah, thank you.
RAINSFORD: Thank you.
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