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Psotta, Michael

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Frankfurter Allgemeine Zeitung - Germany | 01/06/2010

Economic crisis puts Zapatero under pressure

The rating agency Fitch has lowered the credit rating of highly indebted Spain from AAA to AA+, prompting the conservative daily Frankfurter Allgemeine Zeitung to analyse the reasons for Spain's faltering economy: "A certain insouciance coupled with an oversized self-confidence explain why Spain is rather ill-prepared for the crisis. [Prime Minister Rodríguez] Zapatero now faces primarily three sets of problems, all of which demand an urgent solution. The huge budget deficit of over 11 percent of GDP must be reduced to improve the country's creditworthiness. The job market must be made more flexible to induce growth once more. And the ailing savings banks which constitute roughly half of the Spanish banking market must be consolidated in an intelligent way to prevent them collapsing under the burden of rotten home loans. ... [Zapatero] still has a razor-thin margin of support, but even that could fade away in the autumn when the budget for 2011 is put to a vote."

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