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Anorak | The real problem in Spain is the provincial governments

The real problem in Spain is the provincial governments

by | 27th, September 2012

WE’VE a very interesting little stand off developing in Spain. It’s just all rather more complicated that it at first seems.

OK, so we know that the country can’t afford to pay  6% or more on its borrowings forever. It will go bust if it does that. We also know that it needs to recapitalise the banks. Which means borrowing more money: see the above problem.

Great, so, the EU can, through various cobbled together funds provide that money and also lower the interest rates being paid. Great, so, why isn’t this the solution?

Well, that’s where it gets complicated. You see, the regions in Spain have a lot of power. They actually spend 40% of all the government money: oh, and they’ve all borrowed a lot themselves as well. The Province of Valencia for example owes the pharmacies €500 million for prescriptions that it hasn’t bothered to pay them for yet.

Hmm, so, to get a grip on the budget, so as to be able to access the

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Posted: 27th, September 2012 | In: Money Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink