Bloomberg News

OECD Urges EU to Say Bazooka Is Ready for Spain If Needed

November 29, 2012

OECD Secretary General Angel Gurria urged Europe to send a clear message that any bailout request from Spain would be accepted, to show investors that the “bazooka” is ready for use.

“We are calling on Spain’s European partners and the international community to send this unequivocal message,” the head of the Organization for Economic Cooperation and Development told reporters in Madrid today, flanked by Economy Minister Luis de Guindos. “To have the bazooka ready, loaded, and with the finger on the trigger. That doesn’t mean it has to be used.”

Spanish officials including Deputy Prime Minister Soraya Saenz de Santamaria have said that one reason the government is hesitating over whether to seek a bailout is that it doesn’t know if a request would be met by support elsewhere in Europe. Prime Minister Mariano Rajoy also wants to know how much a bailout, which could trigger bond-buying by the European Central Bank, would bring down the nation’s borrowing costs.

De Guindos told reporters that Spain is doing everything it should to ease the crisis and urged Europe to continue making efforts to disperse doubts about the future of the euro. Spain’s 10-year bond yields fell to 5.289 percent today, the lowest since March and more than 2 percentage points below the euro-era high of 7.75 percent on July 25.

Gurria said Spain is “doing its homework,” even as he called for additional measures to make the economy more competitive and reduce the unemployment rate, which at 26 percent is the highest in the European Union.

If the labor overhaul approved this year doesn’t prove effective, more steps could be taken to reduce the gap between conditions on temporary and open-ended employment contracts by “moving toward a single contract,” the Paris-based OECD said in a report on Spain released today.

To contact the reporter on this story: Angeline Benoit in Madrid at abenoit4@bloomberg.net; Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net

To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net


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