Brussels ready to act if Spain asks for second bailout, EC’s Rehn says

Commissioner confirms structural deficit not affected by bank bailout

The European Union’s commissioner for economic and monetary affairs, Olli Rehn said Spain had yet to ask for a second bailout but insisted that Brussels is ready and willing to act if there is such a request.

“There is no request by Spain,” Rehn said at a joint news conference in Madrid with Spanish Economy Minister Luis de Guindos.

Spain has insisted that it wants to know what conditions would be imposed on a request to the European rescue funds to buy its bonds in the primary market. That request would trigger purchases by the European central Bank in the secondary market. However, Rehn said that the conditions are set by the Commission and are “known” and have been discussed within the Eurogroup.

The euro zone has the tools needed to re-establish stability in the financial markets, backed up by the ECB’s bond-buying program, said Rehn, who also met Monday with Prime Minister Mariano Rajoy and officials at the Bank of Spain.

The government said over the weekend that state funding given to ailing lenders, drawn from the bank bailout loan granted by the Eurogroup, would require readjusting the deficit target for this year to 7.4 percent from 6.3 percent. However, Rehn acknowledged this should be regarded as a one-off item and would not affect Spain’s structural deficit. Spain's "goals are within reach," he said. The commissioner said the first tranche of the loan would arrive in November, he said.

Rehn urged the government to continue with reforms to the state pension system to make the retirement age reflect increased life expectancy.

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