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Spain plays bailout waiting game

Tuesday, October 02, 2012 - 02:05

Oct.02 - Spanish Prime Minister Mariano Rajoy has told regional leaders of his party he won't ask for a bailout this weekend, according to news agency Europa Press. As unemployment in the country continues to rise, uncertainty over the bailout request is worrying investors. Joanna Partridge reports

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Their numbers are growing. 4.7 million people are unemployed in Spain - about a quarter of the country's workforce. And now the summer tourist season has ended, more service sector jobs have been cut. SOUNDBITE: Paula, Jobseeker, saying (Spanish): "The situation is critical, the crisis is huge. Spaniards and people from other regions need money." Unemployment is just one of Prime Minister Mariano Rajoy's concerns. His government is inching towards asking for a bailout. Five of the country's autonomous regions have already asked for one and Rajoy's been meeting their leaders. Others are asking for tax reforms. Two regions go to the polls later this month, Don Smith from ICAP says Rajoy may wait until then. SOUNDBITE: Don Smith, Economist, ICAP, saying (English): "The regional elections on October 21st are pivotal to the timing of any bailout and also of course there is an EU leaders' summit just before then, and that provides very good opportunity to thrash out any issues related to this. So my guess is that they'll go probably in the last week of October." Others - like Thomas Costerg from Standard Chartered, say part of the reason for the delay could be due to a reported request from Germany. SOUNDBITE: Thomas Costerg, European Economist, Standard Chartered, saying (English): "For a bailout activation you need approval by all the euro zone countries and in the case of Germany you need the approval from the Bundestag and we should you know keep in mind that there will be soon elections in Germany and it's quite difficult to come before the Bundestag with a new bailout request, especially after you know we had already a bailout request for the Spanish banks." The uncertainty has kept bond yields high and Spain will face its latest test on Thursday when its sells up to 4 billion euros' worth of debt. But for now the waiting game goes on. Joanna Partridge, Reuters

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Spain plays bailout waiting game

Tuesday, October 02, 2012 - 02:05