Brussels reckons the budget will include 35bn euros (£29bn) worth of cuts – and not even healthcare or education funding will avoid the axe. After yesterday’s general strike in Spain, that’s going to be extremely unpopular – but Montoro insisted it’s what the doctor ordered. ‘[Spain] needs a budgetary effort that up to now we have probably never made in our country,’ he said.
Today’s budget will be closely watched by eurozone finance ministers, who (coincidentally enough) are meeting in Copenhagen later this afternoon to discuss Europe’s bailout funds, the European Financial Stability Facility and the European Stability Mechanism. The debate’s around the EFSF’s 500bn euro cap, which almost certainly wouldn’t be enough if a large economy – say, Spain – needed a bailout. So discussions today will be around a temporary measure that would double the fund’s capacity if anything went wrong.
The theory is that if they come up with an emergency fund that’s big enough, markets will increase in confidence again, thereby ensuring that they’ll never actually have to spend the cash. Hmm. That's a fine theory - but it could be extremely expensive to find out if it works.
So you can see why EU economic and monetary affairs commissioner had one thing on his mind on his way to today’s meeting, saying that ‘Spain is in a very difficult situation, but on the other hand Spain has many strengths. Now it is important that Spain continues with consistency in order to impose the sustainability of its public finances.’ Sorry, Oli – we dozed off. Which country were you talking about?