Spanish economy contracts further
Spain's economy contracted for a fifth quarter, undermining efforts to plug the budget deficit that's pushing the nation closer to a bailout, while austerity measures kept inflation at a 17-month high.
Gross domestic product declined 0.3 per cent in the three months through September and 1.6 per cent from a year earlier, the National Statistics Institute said today, compared with an October 23 estimate from the Bank of Spain of a 0.4 per cent contraction.
Consumer prices, based on European Union methodology, rose 3.5 per cent from a year earlier, INE said.
The deepening of Spain's five-year slump, which is prompting record loan defaults at the nation's banks and job cuts at companies including Gamesa, adds to pressure on prime minister Mariano Rajoy as he resists requesting international aid.
While tax hikes he's implementing as part of his austerity program are depressing consumption, they are also spurring inflation, which threatens to add €3 billion to the country's pension bill.
Spain's 10-year benchmark bond yield rose to 5.659 per cent from 5.656 per cent yesterday.
Even after a 174 basis point narrowing since European Central Bank president Mario Draghi first proposed buying cash-strapped nations' debt on August 2, Spain pays 420 basis points more than Germany to borrow for 10 years.