21/04/2013 00:00
TW
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NEWSDESK PALMA “We have improved a lot in terms of the perception of the markets in recent months during which we have carried out big reforms,” Salgado said in an interview with Cadena Ser radio station yesterday morning in Madrid. “This quarter will also be a quarter for reforms.”

The euro had its steepest decline in almost four months yesterday and Greek and Portuguese bonds tumbled on speculation Greece may default, sending risk premiums for Spanish debt soaring. The “fundamentals” of the Spanish economy are unchanged from last week and the government will press ahead with cutting the deficit and forcing struggling lenders to bolster capital, said Salgado.

The spread between Spanish and German 10-year borrowing costs narrowed to 228.5 basis points from 230.6 basis points on Monday.

The spread soared from 175 basis points a week ago after comments by German officials speculating that Greece may run out of alternatives to restructuring and the outcome of a Finnish election underscored the risk that political opposition to the European Union's rescue of Portugal may grow. “We are on the path toward correcting these imbalances and we have to keep on doing reforms, reducing our public deficit and restructuring our financial system,” Salgado told Ser. “In the end, it's the fundamentals of the economy that the markets judge.” But, concern over rising unemployment, which is on course to hit five million this year, is also continuing to hold the markets back and growth in the private sector with consumer confidence still very fragile and jobs the country's number one worry, according to the latest polls.