Spain unlikely to need further financial help, say EU

Olli Rehn, European Commissioner for Economic and Monetary Affairs, is happy with Spain's economic progress.

Telling news emanated from the EU on Tuesday as Olli Rehn, the European commissioner for economic and monetary affairs, remarked that there is a good chance of Spain concluding its current financial assistance programme without the need for a successor programme.

Rehn was speaking during a visit to Paris, and his positive assessment is sure to resonate throughout the corridors of power in Europe…

Spain has implemented a set of tough reforms – focused primarily on the labour market and the banking sector – and the government faced mass protests during the past 18 months, but reassurance that such measures have had the desired effect are sure to be met with jubilation in Madrid.

The first round of financial assistance bestowed on Spain by the EU amounted to €41bn; a hefty figure, but the country was entitled to draw down a full €100bn if it so wished. That Spain chose not to (indeed, didn’t have to) was an early sign that things were not as bad as first feared.

The money was used to help bail out the country’s weakest lenders, and the measures implemented so far have been a resounding success. So much so that the European Authorities – who reviewed Spain’s situation at the beginning of the week – reported that all reforms were on track.

However, despite the sterling feedback, Spain can still decide to press for a secondary round of financial stimulus. Whether Rajoy’s government feels such measures are necessary remains to be seen, but for a country mired in desperate fiscal straits not so long ago, it isn’t such a bad position to be in…