A Bailout for Spain is Seen Elusive as Budget Deficit Cuts are Unlikely Near Term

“A possible bailout for Spain is not imminent, a European Union official said, as concerns grow over the country’s ability to reach its deficit-reduction targets.

There’s no guarantee that Prime Minister Mariano Rajoy will ask for aid from the EU rescue funds and he’s facing a challenge to deliver the budget-deficit cuts pledged, the aide, who asked not to be named, told reporters in Brussels today.

While European Central Bank President Mario Draghi said yesterday the ECB is ready to start buying bonds of sovereigns that qualify for aid, officials from Spain, Germany and now the EU have damped expectations of a rescue this week. Rajoy on Oct. 2 denied reports a rescue request would come this week. Economy Minister Luis de Guindos last night said no bailout was needed.

There’s “a potential slowdown in Spain’s application for a European program,” Thomas Costerg, an economist at Standard Chartered Bank in London, said yesterday by e-mail. “There is a rising fear that the 2013 budget and the stress tests may have been some sort of window dressing to get European assistance.””

Full article