Germany's Schaeuble says Spain doesn't need bailout

Fri Sep 21, 2012 11:39am EDT
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By Stephen Brown and Julien Toyer

BERLIN/MADRID (Reuters) - EU paymaster Germany said on Friday that Spain does not need a European bailout, dousing financial market expectations that Madrid will gain early relief from European Central Bank bond-buying.

German Finance Minister Wolfgang Schaeuble's comment, contrasting with pressure from France for Madrid to avail itself of ECB help, seemed aimed at deterring Spanish Prime Minister Mariano Rajoy from applying for assistance soon.

"Spain needs no program because it is doing the right thing and will be successful," Schaeuble told the Foreign Press Association in Berlin, saying he was in full agreement with the Spanish government.

"What Spain needs is the confidence of the financial markets and that is where Spain has real problems," he added.

In Madrid, Spain's deputy prime minister denied a Reuters report that the government is considering freezing pensions as it races to cut spending and meet likely conditions for any rescue package.

"The prime minister has said publicly that the first thing he did when taking power was bring pensions up to date and that should be respected ... in his exact words, it would be the last thing he would touch," Soraya Saenz de Santamaria told reporters.

Reuters also quoted sources with knowledge of the matter as saying Spain was considering speeding up the raising of the retirement age to 67 from 65.

The government is committed to a 1 percent increase in pensions and a 3 percent regular inflation catch-up by the end of the year. Suspending inflation indexation might enable Rajoy to argue he had not "touched" pensions while saving money in real terms.   Continued...

German Finance Minister Wolfgang Schaueble addresses the Bundestag, the lower house of parliament, in Berlin September 11, 2012. REUTERS/Fabrizio Bensch