Home News EU commissioner Rehn optimistic for Spain, Portugal: media

EU commissioner Rehn optimistic for Spain, Portugal: media

Published on 26/03/2011

EU economic affairs chief Olli Rehn said Saturday that he believed both Spain and Portugal could still avoid resorting to the EU's emergency bailout fund.

“Spain’s debt burden is lower than the EU average,” Rehn told national public broadcaster YLE.

“In addition, Spain began last year making decisive decisions to balance public spending, enact structural reforms both in the pension system and the labour market, and, very importantly, in their own savings bank system,” he said.

The European commissioner for economic and monetary affairs pointed to Spain’s national savings bank system as a weakness, but said he believed that the government was taking measures that would lead it out of crisis.

“You can see that Spain’s inflation rate has not increased in the past few days even though Portugal’s rates have risen,” the Finnish commissionner noted.

Portugal meanwhile headed towards crisis when the opposition successfully blocked the government’s attempts to pass a stringent budget-balancing plan, prompting Prime Minister Jose Socrates to resign on Wednesday.

Nonetheless Rehn does not think it inevitable that Portugal will turn to the EU for a bailout.

“The significant thing is that their central political forces are committed to the goals to rapidly shrink the government debt, which were agreed between the commission and the government a couple of weeks ago,” Rehn said.

If the necessary steps are taken, Portugal will “move forward with reforming its public finances,” he said.

Asked whether he was considering running for president in Finland next year, Rehn said he would think about it over the summer, once the work on the EU’s temporary and permanent rescue funds was largely over.