As European leaders meet to finalize the plans for a bailout of failing banks in economically troubled countries, Spanish confidence in the country’s banks plummets.
A recent Gallup poll shows that only one in five — 19 percent — of Spaniards have confidence in their banks and financial institutions, down from about half — 52 percent — in 2008.
However, economic confidence in the country has been slipping since 2007 when Gallup showed that 52 percent of Spaniards thought that economic conditions in Spain were getting better as a whole while only 22 percent thought conditions were getting worse.
Now, after suffering through two recessions in three years and an unemployment rate of 25 percent, a whopping 75 percent of Spaniards think the economy is getting worse while only 10 percent think it’s getting better. These numbers have changed little since 2009 when confidence in the Spanish economy initially plummeted.
EU leaders met on Friday to finalize plans for the EU bailout plan that aims to recapitalize banks, shore up government balance sheets and bring down high borrowing costs.
Spain is set to receive up to 100 billion euros, 30 billion euros of which have already been given to Spain by July 31 to be held in reserve and only doled out in case of an emergency. Other bits of bailout funding could be given out as well depending on the needs of Spanish banks.
The bailout still has strings attached. EU finance ministers stressed that Spain will need to overhaul its financial sector and meet deficit reduction targets to continue receiving aid.
“Spain will be expected… to correct its excessive deficit in a sustainable manner by 2014,” European Economics Commissioner Olli Rehn said in a statement.
The full bailout is going to be available until the end of next year, but most recapitalization efforts are expected to be completed by June 2013.
However, even with bailout funds the Spanish government expects to stay in recession next year as austerity measures are carried out.
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