The German Parliament, with a huge majority, has accepted a proposal to help bailout the banks of Spain, with the aim to stop the Spanish economy from spiralling downwards, as it has been for quite some time now. Great news for those interested in a mortgage or buying property in Spain.
Since Spain’s debt emergency started there have been ten votes on European crisis measures. In the most recent of these votes, the majority (473 to 97) voted to pass the proposed bailout [valued at around €100bn (£78bn)] to supply some desperately sought after cash to stimulate the spanish financial sector.
Only a couple of MPs across the parties opposed the bailout, probably due to the fact that they were dragged kicking and screaming from their Summer holidays for the vote. Or perhaps more likely, in opposition to the German economy, is yet again, taking responsibility for providing rescue packages for European countries in debt.
Frank-Walter Steinmeier, the leader of the of the opposing SPD party revealed that a handful of MPs are "totally unconvinced." "How many rescue packages are we actually going to need?" asked Steinmeier. "It cannot go on like this." Thirteen deputies abstained in the vote. This is in contrast to the general support across the majority of the parties.
Due to the point that Madrid hoped to sign the agreement formally with eurozone finance ministers as quickly as possible, the vote was classed as “urgent”.
"In this exceptional situation, we are helping the Spanish state to battle against the overblown nervousness of the financial markets and we are therefore making our contribution to the overall financial stability of the eurozone."
The first chunk of the €30bn is expected to be received by Spain at the end of the month. This is return to the promise of adhering to a selection of EU inspections and reforms of the banking sector that aim to establish an efficient restructuring process.
If anyone was sceptical of the urgency of this bailout, earlier on a bond auction in Spain showed a lower demand and much larger borrowing costs, leading secondary market rates to increase close to the “unsustainable” 7pc level.
There is still conflict in Germany (providing almost 30pc’s worth of the loan) over who should be accountable for guarantees
It was confirmed last month during a summit of EU leaders, that banks could be supplied straight from their permanent bailout fund, as long as an expansive European body, directed by the European Central Bank, is established.
Until that point, Berlin has requested that the responsibility for the loans and their repayment is to be in the hands of the spanish government.
Schaeuble stressed that "Spain makes the application, Spain gets the money to recapitalise its banks and Spain is liable as a country for the aid,"
On the whole, analysis specialists are pretty laid back about the vote by the Parliament and it has had little impact on the markets.
On September 12th the top court of Germany will be ruling on whether or not the Eurozone €500bn permanent rescue fund will become law, so at the moment economists are keeping an eye on how that is developing.
Judgment from the Federal Constitutional Court will be placed on the series of obstacles to the
EU's fiscal pact and the European Stability Mechanism after the president of Germany refused to write his signature, hindering progress.
It’s expected that the court will allow the key crisis tools to pass, and it’s also thought that the German Parliament will hold more influence over further bailout issues, suggesting that the chances of this being the last emergency vote are slim.
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