Ireland's bailout has not quieted fears of a European sovereign debt crisis -- indeed, worries about national defaults are spreading. Investors have punished Europe's markets since the E.U. and the IMF announced the plan, and many have turned their attention to Spain, Portugal and Italy as the next potential trouble spots. With that in mind, Spain said Wednesday that it's taking several measures to stop contagion from reaching its shores, including selling a stake in its lottery business, Bloomberg reported.
Though the government said in January that it had no plans to sell the lottery, socialist Prime Minister Jose Luis Rodriguez Zapatero (pictured) told Parliament Wednesday that Spain will sell 30% of the state-run company. The lottery had a net profit of 2.99 billion euros ($3.91 billion) in 2009, most of which was channeled to the Treasury, according to its annual report. Spain will also sell 49% of the state's airport-operation business.
Another measure will have a more direct impact on Spaniards: The government said it will also eliminate a one-time jobless benefit of 420 euros ($549) per month to those whose unemployment pay has ended. At 20.7%, Spain's unemployment rate was Europe's highest in October.
But Spain also has the third-largest budget deficit in the euro region -- 11% of gross domestic product last year. With yields on Spanish debt the highest since euro was created, Zapatero has pledged to cut the deficit to 6% by 2011 in an effort to calm market fears and pull Spain out of the worst crisis in six decades "whatever it costs," Bloomberg adds.
Of course, it doesn't help that Europe's credit markets appear closed, as the Financial Times reported. Spanish banks, and its economy, are highly dependent on foreign credit. Spain needs to finance a total of 253 billion euros ($331 billion) of maturing debt next year, and a credit crunch would make its efforts to manage an economic recovery difficult.