This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

P.M. Rajoy Says Spain Faces Tough Year Ahead

By HAROLD HECKLE

MADRID (AP) â¿¿ Spain faces another tough year as it grapples with recession, a deep financial crisis and 25 percent unemployment, its prime minister said Friday.

In his end-of-year assessment, Mariano Rajoy said the country's crisis had been worse than anticipated.

"We are facing a very tough year, especially in its first half," he said. "Spain's economy will remain in recession for some time, but we expect it will improve in the second half of 2013."

While Rajoy was speaking, investor concerns government over attempts to shore up the main cause of Spain's problems â¿¿ its shaky bank system â¿¿ sent shares in lender Bankia falling nearly 27 percent.

Spain's economy has been hit hard by the collapse of the country's property market in 2008, which left ordinary Spaniards and banks struggling under the weight of toxic loans and assets. The country's government rushed to prop up its financial system, sending its debt levels higher.

To get its deficit under control, the government introduced a series of harsh austerity measures, such as spending cuts and tax rises. This has had a damping effect on the Spanish economy, pushing it into recession and driving up unemployment.

In its bid to overhaul the financial industry, Spain had to seek a ⿬100 billion ($132.7 billion) lifeline from the 17 European Union countries to strengthen its failing banks. Some analysts said Rajoy acted too slowly to shore up failing banks. "Some measures, like bank restructuring, were taken too late," said Guillermo Aranda, CEO at ATL Capital investment company.

The prime minister said Friday that structural reforms and "the restructuring of the financial sector" were key elements in Spain's road to recovery.

However, the stock market showed it was not convinced by the progress made, as shares in Bankia SA fell for a second day, dropping 27 percent to ⿬0.40 as investors rushed to offload their holdings in the bank.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,001.22 -38.27 -0.22%
S&P 500 1,988.40 -3.97 -0.20%
NASDAQ 4,538.5510 +6.4470 0.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs