European Finance Ministers to discuss Spain’s overhaul effort

European officials will move to prevent Spain from triggering a new round of convulsions as policy makers begin preparing for a summit next week aimed at easing the region’s three-year-old debt crisis.

European finance ministers meet in Luxembourg today to discuss Spain’s overhaul effort and closer banking cooperation. Tomorrow, German Chancellor Angela Merkel makes her first visit to Greece since the turmoil began in 2009. The next day, Spanish Prime Minister Mariano Rajoy travels for talks with French President Francois Hollande in Paris.

Greek Prime Minister Antonis Samaras has said his two-year package of spending cuts contains unfair and painful decisions that are necessary to restore credibility and keep the country in the euro area.

Demonstrator hold signs against social cuts during a protest organized by Spanish trade unions against unemployment in Madrid, Spain, on Sunday.

A demonstrator holds a sign against social cuts during a protest organized by Spanish trade unions against unemployment in Madrid, Spain, on Sunday.

“It feels as if we are in for a month or so of Spanish trouble,” Erik Nielsen, London-based chief global economist at UniCredit SpA (UCG), wrote in a note yesterday. Nielsen cited the risk that Spain will wait too long to request financial assistance and that a rescue package will be badly designed.

A month after European Central Bank President Mario Draghi unveiled a plan to gain the upper hand through central-bank bond purchases, handing the burden of crisis resolution over to European governments, leaders have yet to agree on a blueprint for rescue conditions and centralized bank supervision.

Finance ministers from the 17-member euro area will discuss issues including Spain at 5 p.m. in Luxembourg; ministers from all 27 nations in the European Union will meet the next day. EU leaders gather for a summit in Brussels the following week on Oct. 18-19.

Via – Bloomberg

 

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