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Spain Says It’s Meeting Rescue Rules Already as Guindos Heckled

Oct. 5 (Bloomberg) -- Spain is already carrying out the policies that the European Central Bank would demand in return for buying its bonds, Economy Minister Luis de Guindos said as young Spaniards heckled him during a speech in London.

Spain “doesn’t need a bailout,” de Guindos said at a conference at the London School of Economics yesterday. He described the ECB’s plan to buy bonds of nations that agree to a rescue program as a “proposal” tied to conditions that “aren’t very far from the situation we have now in Spain” in terms of budgetary and economic policy.

While Prime Minister Mariano Rajoy has postponed the decision on whether to trigger ECB bond-buying since August, his government passed a package of measures to overhaul the economy last week that matched the latest recommendations from the European Union. The government, which has faced increasing street protests in the lead-up to regional elections this month, has raised taxes, cut benefits and trimmed healthcare even as the recession has pushed unemployment to 25 percent.

De Guindos was interrupted three times during the conference by protesters who rolled out a banner saying “Spain is for sale.” They shouted questions about what austerity measures mean for Spaniards and why the government isn’t doing more to tackle tax evasion.

Public Pays

“I didn’t want to interrupt the meeting but I felt I wasn’t being given a chance,” Isabel Pastor, a 30-year-old art therapy student from Valladolid, Spain, said after the event. “Companies are evading tax and the public is having to pay.”

The government, in power since December, approved an amnesty to allow tax evaders to pay a 10 percent one-off fine while adopting a series of measures designed to tackle fraud in future. De Guindos said the government is adopting budget cuts and measures to strengthen the economy as it has no alternative.

“Sometimes governments have to take unpopular decisions, and I understand the discouragement in the public,” he said. “But we believe they are necessary.”

The minister’s comments on the conditions that would be demanded of Spain if it does seek a rescue chime with those of Bank of Spain Governor Luis Maria Linde, who said yesterday conditions wouldn’t include deep spending cuts.

“It’d be other issues: structural ones, supervision, medium- and long-term issues, information issues,” he said. “There may, of course, be some measures that affect spending, but I don’t think this agreement would imply anything very significant, anything that isn’t manageable on spending.”

To contact the reporter on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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