Spain preparing for bailout

Spain is apparently ready to request a eurozone bailout for its public finances as early as the weekend, although it is also being reported that Germany is urging it to hold off on the decision, partly as it comes so soon after a €100 billion bailout for the Spanish banks.

Asked about the reports that Germany was urging Spain to wait, a German government spokesman told Reuters that every country decides for itself and Germany isn’t pushing in one direction or the other. Meanwhile,
a spokeswoman for Spain’s Prime Minister Mariano Rajoy said she was not aware of any veto from Germany for an aid request.

There has been widespread speculation that Rajoy has been stalling a bailout request until after October 21 regional elections in his home state of Galicia and the Basque Country, although diplomats are now saying that it is German discouragement, not Spanish pride, that is now holding back a request for assistance.

One scenario under consideration is that Spain is ready to submit the bailout request at the weekend, with German agreement, so eurozone finance ministers can discuss it at their next regular meeting in Luxembourg next Monday.

Another scenario is that Madrid could make the application before an EU summit in Brussels on October 18th and 19th, but it is thought that countries such as France and Italy are pushing for an early decision to avoid the situation dragging on and possibly having an adverse effect on their own position and finances.

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