Favourite to be Spanish PM asks markets for breathing space

18th November 2011, Comments 0 comments

The favourite to be Spain's new prime minister, Mariano Rajoy, pleaded Friday for markets to give this weekend's election winner "more than half an hour" to confront an economic crisis.

As he spoke, Spain's borrowing costs and its risk premium -- the extra return investors demand over safe-haven German debt -- soared to euro era records.

"This is extremely bad for Spain's interests," the 56-year-old Rajoy said in an interview with radio Onda Cero.

"We hope that this will stop and that they realise that there are elections here and that those who win these elections have the right to a minimum margin, which should be of more than a half hour," he added.

Rajoy's conservative Popular Party is tipped for a landslide win in Sunday's elections as voters turn against a Socialist government that presided over the crisis and a jobless rate of 21.5 percent.

Markets seemed to take little comfort from the expected change in government.

The yield on Spanish government 10-year bonds surged to a high of 6.90 percent -- the highest since the single currency was created -- from 6.487 percent at the close on Thursday.

The debt risk premium shot to a euro-era high of 503.4 points, after closing Thursday at 459.5.

Spain's borrowing rates are now levels widely considered to be at the limit of what the country can afford over the longer term to finance its public sector debt.

Rajoy has vowed to make cuts "everywhere", except for pensions, so as to meet a target of cutting the public deficit to 4.4 percent of gross domestic product in 2012 from 9.3 percent last year.

"We are a serious and reliable country and we will pay our debt," the opposition leader told Onda Cero.

"This is a great nation, with big companies that invest abroad, a country which exports, which until recently was the eighth largest economic power in the world. This is a serious country and this is the message we want to give."

© 2011 AFP

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