Esteban Gonzalez Pons, the deputy general secretary of Spain’s ruling People’s Party, said Spain and Italy may end up paying for the euro while others benefit unless the European Central Bank brings down borrowing costs.
“We need the ECB to act like a central bank for the euro so that the euro doesn’t create a division between its members, with countries benefitting from the single currency and others like us being damaged by it,” Pons said in an interview on Onda Cero radio station today.
Spanish Prime Minister Mariano Rajoy, who returns to work in Madrid today after his vacation, is waiting for the central bank to set out the details of its plan to lower bond yields before deciding whether to request aid. ECB President Mario Draghi said the program would be in conjunction with Europe’s rescue funds and will likely be conditional on further measures to balance the budget.
Rajoy has already introduced more than 100 billion euros ($124 billion) of spending cuts and tax increases since December, driving the Spanish economy into its second recession in three years as unemployment rose to a record 25 percent in the second quarter.
“Part of the crisis is our responsibility but we are also paying for the single currency’s weakness,” Pons said. “Because we are among the strongest remaining European economies, Italy and ourselves are paying for the others.”
The Spanish government is cutting spending on health and education and Italy’s bond yields have surged even as it heads for a balance budget next year. By contrast, German exporters are generating 100 billion euros a year in additional sales as the debt crisis holds down the currency, making foreign sales cheaper, according to Nathan Sheets, chief international economist at Citigroup Inc. in New York.