The EU denies that it is planning a financial intervention in Spain

The EU denies that it is planning a financial intervention in Spain
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By h.b. - Jun 11, 2010 - 10:17 AM
The claim has been published in the German edition of the Financial Times

Spanish Minister for Tax and the Economy, Elena Salgado - Photo EFE

The Spanish Ministry for Tax and the Economy has roundly denied a report in the German edition of the Financial Times today which claims the EU is preparing an intervention into Spain as the country faces bankruptcy.

The article is titled, ‘The EU is preparing for the bankruptcy of Spain’, and claims that the Spanish fund to protect banks and savings banks is on the edge of collapse because of the huge debts of private companies.

A spokesman for the Ministry for Tax and the Economy told the El Mundo newspaper that such an intervention ‘Has neither been studied, nor requested, nor would help be asked for in the future’.

The German Financial Times quotes ‘information’ to which it says it has had access which shows that Portugal was the main candidate for intervention at the start of May, but suddenly the EU concern has turned to Spain.

The paper claims that ‘For some days the interbank trade in the South of Europe is at a practical stand still’. It says that unlike in Greece where the main concern is the large public deficit, in Spain the concern is for the debts in the private sector following the bursting of the real estate bubble. It says that more Spaniards than originally thought will be unable to repay their bank debts, and this will make the situation in the financial system even worse, and that more funds will be needed for the banks to survive.

The accuracy of the article has also been denied this morning by the EU. Sources at the European Commission have explained, to the El Mundo newspaper, that the only plan existing is for all member states.

The F.T. article in German - here

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