Financial Update

Europe has denied that the dialogue with Spain over the reforms would be step to getting a rescue. The European Commission has admitted to a close contact with the Spanish executive, but they say this is only to ‘advance the reforms’. They say it is something they do with all member states when there are specific requirements for each country.

Reuters has reported that the Government is considering freezing pensions. That will form part of the possible conditions to formalise a rescue from the European Central Bank, ECB. The other measure Reuters says could happen is for the Government to take the retirement age to 67.
Reuters say that movement of the retirement age and the freezing of pensions will save at four 4 billion € a year. It will meet the demands of Troika.
Officially Spain is resisting rescue, but it is known to be talking in Brussels on the details of the European help program.
The International Press is reporting today that the rescue will be made public next week together with the State Budget for 2013.

There has been an historic of foreign tourists visiting Spain in August at 7.9 million.
The number is 5% higher than last August and the number of foreigners to visit this year to August is 40.7 million, up 3.6% on last year.
Cataluña was the regional community which saw the highest increase, of 14.7%. Madrid fell nearly 30% because of the World Youth Day which was held in the capital last year.

The transport unions have claimed a ‘massive following’ in the strike in Madrid on Friday, and notes there were no incidents. The Metro and bus services were however halted again between 6pm and 8pm. Unions claim 100% support on the urban buses, and 95% on the Metro (the company says its only 48%).

The Financial Times says Spain is negotiating backstage on the conditions of a rescue. The Government’s new reform plan will be announced this coming Thursday.

Mariano Rajoy met with his counterpart, Mario Monti in Rome on Friday to analyse the evolution of the economy.
Neither Spain nor Italy has given a firm answer on the possibility of asking for help from the European Central Bank. Spain has said that ideal situation would not to accept the help.

The Cabinet meeting today has been studying the pre-project to reform the education system. Basic education will be strengthened, the number of options and training courses will be reduced, and pupil evaluations will national and based Madrid as opposed to in the regions which is the case now. These tests will be obligatory to obtain the ESO title as graduate. The reform will probably start in colleges which teach in separate sexes.

The President of the CEOE, Juan Rosell, has been calling for a resolution on the lack of financing for Cataluña. In a press conference on Friday he stated that the only voice from the patronal is that the businessmen want a single market.

And finally,
Fitch has reduced its rating for Banco Popular from BBB- to BB+, that to say junk bond level. The agency argues its decision is based on the prolonged recession in Spain, the real estate crisis, and the provisions for more construction.

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