PP pressures Zapatero to bring elections even further forward

Risk premium surges for second day - King calls on political parties "to close ranks" - Rajoy assures country won't need bailout

On another dark day for the European economies, which was marked by another record surge in Spain's risk premium, Prime Minister José Luis Rodríguez Zapatero on Wednesday called on the country's political forces to rally together against the speculative attacks by the markets on the nation's finances.

Zapatero was back in his office after cutting short his vacation in Doñana, telephoning leaders of all the parliamentary groups, including Popular Party leader Mariano Rajoy, to explain the situation and telling them that solutions, in any case, should come from Brussels.

After speaking to Rajoy, the main opposition leader told Europa Press: "Spain is not going to need any bailout," and that Zapatero was telling the truth. Yet Rajoy added that "an urgent change in economic policy" was needed.

More information
Spain's risk premium hits record high as markets pile on pressure
PP ramps up pre-electoral rhetoric over demise of ETA

For the second day in a row, Spain's risk premium reached a new record high by peaking at 407 basis points over the benchmark German bund. But it quickly fell to stablize at 385 by the end of the day.

Wednesday's panorama was so erratic that even King Juan Carlos called on the nation's political forces "to close ranks" and "not to bicker" among themselves, because this was a time to "press big policies," according to Pere Rotger, president of the Balearic Islands parliament, who met with the king during the monarch's vacation stay in Palma de Mallorca.

Some in the PP even suggested that Zapatero would bring forward even further the November 20 date for early elections. Cristóbal Montoro, the PP's economic advisor, said he thought that the prime minister was in the midst of his weakest moment and speculated that the elections might be held at the end of October.

"The serious situation [that Spain is facing] is the fruit [of the government] not bringing forward the elections even more," Montoro told a radio station.

Meanwhile, the markets continued to punish Spain as well as other European nations.

After a volatile day, the blue-chip Ibex-35 was down 0.85 percent at 9,037.70 points. The Spanish bourse was affected primarily by new figures coming out of the United States on the country's sluggish economy and on the soaring risk premium rates in the Spanish and Italian debt markets.

Zapatero met late in the day with Economy Minister Elena Salgado and other Cabinet officials at the prime minister's La Moncloa residence. Afterward, Salgado predicted that the situation could continue for "a few days" more but that the government would remain "very attentive."

Earlier in the day, the prime minister also spoke by phone with Herman Van Rompuy, European Council president, and they both agreed on the need for the euro nations to approve "as quickly as possible" the accords over a second bailout package for Greece and initiate reforms to support the euro zone, according to Moncloa.

Rajoy, vacationing in Galicia, kept in close contact with his party's economic advisors. In his interview with Europa Press, the PP leader said that "now was not the time to look for guilty parties" but instead "a time to push for change and initiate reforms."

"Very hard times are coming but Spain will recover. During difficult moments and when everyone comes together for a national cause, which in this case is to defeat the crisis and create jobs, our country has shown it is a great nation," he said.

Recomendaciones EL PAÍS
Recomendaciones EL PAÍS