Spain: Rajoy should 'act fast', warn economists

Damning report in Financial Times

20 August, 14:52

(ANSAMed) - MADRID, AUGUST 20 - Spain's Prime Minister Mariano Rajoy needs to 'act fast and initiate a radical plan for the country', according to a report published Monday in the Financial Times. In the article, economists Luis Garicano (London School of Economics) and Jesus Fernandez Villaverde (University of Pennsylvania), criticize Spain's governing Partito Popolar as being on the 'road to nowhere' during their nine months in power. 'It seems that Rajoy believes that problems don't resolve themselves but dissolve with time, if you have enough patience', write Garicano and Villaverde.

'His government has applied this lesson to the Eurozone crisis to catastrophic results.' The two economists go on to suggest that government efforts to obtain European Union (EU) funding without set terms, 'threatens the collapse of the Euro,' and that Spain's six month budget delay has slowed down inevitable reforms demanded by the EU.

Austerity packages are having a 'devastating effect' on voters, say the economists, 'who can't see the difference between spending cuts and structural reform.' On top of this the economic crisis may become an institutional one, as some regions of Spain consider a genuine bid for independence.

'The Spanish government should abandon populist temptations and implement a program of genuine reform,' conclude Garicano and Villaverde. (ANSAmed).


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