- Says deepening economic recession is limiting the Spanish government’s policy options.
- Says rising unemployment and spending constraints likely to contribute to friction between Spain’s central and and regional governments.
- Sees mounting risks to Spain’s public finances, due to rising economic and political pressures.
- Spain’s political institutions have declining capacity to deal with the sever challenges posed by current economic and financial crisis.
- Says could cut Spain further if political support for the current reform agenda wanes, eurozone support fails to help keep government borrowing cost sustainable.
- Could give Spain a stable outlook if budgetary and structural reform measures, and a successful eurozone support program, stabilize Spain’s credit metrics.
EUR/USD softer from opening levels trading now at 1.2865/68.
