Euro crisis deepens as time starts to run out for Spain's banks and regions | Business ... - 0 views
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But the shortcomings of the agreement have once again undermined renewed confidence in the eurozone and sent the bond yields of several countries higher, including Spain and Italy.
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The Spanish government said a predicted rise in GDP next year of 0.4% had proved optimistic, and the economy would suffer another year of recession.
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Regional governments deliver the key parts of the welfare state, including health, education and social services.
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Eastern Valencia said it was asking for central government help as it could not refinance loans that must be paid off this year.
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Valencia, which has long been run by Rajoy's PP, is emblematic of Spain's current crisis. A property crash has hit both regional government income and the region's banks, with its three main banks having to be rescued. Local politicians, meanwhile, have a growing reputation for corruption and frivolous spending.
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Valencia mopped up a quarter of the €17bn (£13.2bn) of extra money made available by central government in April to pay a backlog of regional government bills.
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Last year the regions not only failed to meet government-set deficit reduction targets, but actually increased their joint deficit.
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Analysts believe most regions will miss this year's 1.5 percent deficit target. The government last week asked at least eight of them to revise their 2012 budgets, threatening to take over the finances of some of them.
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it was startling to see international investors fearful of getting their money back from members of the single currency.
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He said the eurozone's total public sector debt will reach 90% at the end of the year compared to 106% in the US and 235% in Japan.