Eq: Dev ex-US
In what is surely a conundrum of 21st century Europe, thousands of people are taking to the streets across Spain in order to call for a democratic referendum on the country’s monarchy. The calls for the devolution of the royal family come just as Spanish King Juan Carlos has abdicated in favour of his son. King Juan Carlos had been immensely popular for leading the country to democracy and capitalism, but since 2012 he and his family’s reputation has been severely tarnished by a corruption scandal that involved an expensive elephant hunting holiday while the country was at the height of its financial crisis. The King’s daughter, Princess Cristina, is also under a separate investigation for corruption. The king plans for his son, a former Olympic Yachtsman, to take over as King now that he has abdicated at 76 years old.
FINSUM: An old constitutional monarchy potentially voting to rid itself of its royal family is a major social change in Europe and could be a bellwether for more cultural upheaval as populism rises across the continent.
In order to boost its nascent recovery, Spanish PM Rajoy has announced that the country will cut taxes and add €6.3 bn in stimulus. The government will lower the corporate tax rate from 30% to 25% and try to put more money back in the pockets of families in an effort to “improve the competitiveness of the economy, raise savings and above all else to boost employment,” said Rajoy. However, many will be skeptical of the plans, as Spain has promised to meet a target of a 3% budget deficit in 2016, but is still running a 5.6% deficit this year and is forecasted to manage a 6.1% deficit in 2015. The €6.3 stimulus would be part-funded by the private sector and part-funded by the public sector, and Rajoy hopes it will boost investment in research and development and “re-industrialise” the nation. The move is part of a political attempt to boost the popularity of Mr. Rajoy’s party, PP, after they performed poorly in recent European parliamentary elections. Many Spaniards feel as though they are yet to benefit from the reported 1% growth of the economy.
FINSUM: Spain is loosening the belt to boost its recovery despite the fact that this runs directly against current EU fiscal doctrine. Hopefully it has the intended effect, because the budget deficit stills looks wide, and the country cannot afford to slip further.