Redwood: A tale of two countries

SPAIN

This week saw the Spanish authorities seek to cut a further €10bn from their public sector budgets, in an attempt to stave off further rises in their 10-year and other borrowing rates.

The ECB rode to their rescue by saying it would consider buying more Spanish government debt, once the government had pledged more austerity. The problem remains intense in Spain, with 23% unemployment, no ability to devalue its own currency to try to price itself back into markets, and always being at the mercy of the bond markets. The UK is in contrast still enjoying low borrowing rates, thanks to a large quantitative easing and bond buying programme by the Central Bank. It is also seeking a recovery with more exports, following devaluation. It has lower unemployment and a compet...