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Independent voices from the The Washington Times Communities
Topic - Jonathan Loynes
The weekend plan to rescue Spain's ailing banks was supposed to boost confidence in Spain and the other 16 countries that use the euro. The skeptics said it would provide just temporary relief for the markets. In the end, it barely did even that.
As Europe makes a wobbly recovery based largely on selling goods overseas, the key question for its economy is: Are shoppers at home ready to start spending again?
Britain announced the toughest cuts to public spending in decades and new tax increases on Tuesday in an emergency budget aimed at sharply reducing the country's record debts.
"We doubt that [this bailout] is the only support that the country will need," said Jonathan Loynes, chief European economist at Capital Economics in London. "The poor economic outlook will also maintain concerns that Spain will at some point require a government bailout, too."
"Adding the new measures to the previous government's plans points to a total fiscal tightening of over 6 percent of GDP over the next five years, the bulk of which -- 77 percent -- will come from real spending cuts," Mr. Loynes said.