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Economist warns of future for Spain

Wed 16th Nov 2011

Italy and Greece have been hogging all of the Eurozone crisis headlines in the national press and media over the last few week - something which Spain and it´s politicians are quite possibly very grateful for as they gear up for a general election this weekend.

Spain, with an unemployment rate of 21.5% and a budget deficit of 9.2% of GDP (for 2010), is of as much - if not greater - concern to analysts, bankers and investors.

French and German exposure to Spanish debt alone stands at 400 Million Euros.

Nouriel Roubini, the American Economist and Chairman of Roubini Global Economics, predicted both the collapse of the American housing market and worldwide recession, recently spoke of his predictions for the future of the Spanish economy : "Right now the worries in the market are about Italy, but Spain is as much of a disaster as Italy. There debt as a share of GDP is lower, but their deficit is higher. Unemployment 20% including young people 40%."

The Economist continues to say how he could not discount the possibility of contagion spreading to France due to the exposure of French banks to Italian and Spanish markets. He also spoke of the possibility of a downgrading of France's credit rating from AAA to AA.

Roubini estimates that both Greece and Portugal will be asked to leave the Eurozone, but that both Spain and Italy will be able to avoid this in the short terms (12 - 18 Months). However, he warns that this could still happen in the medium term (up to 3 years) if they are unable to bring their debt and national deficit under control.

He continued that Bank failures look unlikely, but further Government takeovers of trouble financial institutions - even if on a temporary basis - may still be probable.

Comment on this Story

 
Very simple question. Why can the average man in the street know what is going to happen with regard to Spanish debt. Why don't all the Governments and Bakers admit. Why ? because they all have their hands on the money
Patrick Ballinger - Fri, 18th Nov 2011

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