World Economy

Spain Government Faces Budget Revolt

Spain Government Faces Budget RevoltSpain Government Faces Budget Revolt

Political allies of Spain’s minority socialist government have pulled support for its budget hours before a key vote in parliament, in a move that casts renewed doubts over political stability in the eurozone’s fourth-biggest economy.

Prime Minister Pedro Sanchez, who controls only 84 seats in the 350-strong parliament, cannot pass the budget without those parties which brought him to power in June when they backed a motion of no confidence against his conservative predecessor, Reuters reported.

If Sanchez fails to pass his budget plan, the future of his fragile, two-month-old administration could come into question.

Two Catalan regional parties, the Catalan Democratic Party and Esquerra Republicana de Catalunya, as well as leftist Podemos have decided to abstain in the parliamentary vote to agree on a new deficit-cutting path, spokespeople for those parties told Reuters.

Meanwhile, strong results in Mexico and a customer shift to more cost-efficient digital channels helped Spain’s BBVA surpass analysts’ profit expectations for the three months that ended in June, despite weak currencies in developing countries that negatively affected results in markets outside Europe.

The Spanish lender reported net earnings of €1.31 billion ($1.52 billion) during the second quarter, up 18.2% from the year before. Analysts polled by Bloomberg had expected net earnings of €1.22 billion. Net interest income, the profit a bank makes on its core lending activities, was €4.36 billion, a drop of 2.8%; the bank said it would have risen approximately 9% without currency effects such as the depreciation of the Turkish lira and the Argentine peso.

BBVA’s move into digital and mobile banking continued powering ahead. The bank claimed 25.1 million digital customers at the end of June, up 26% from the previous year; of those, 20.7 million were mobile customers.

As Spain’s economy continued to improve, loans in BBVA’s home market increased by 1.6% and customer deposits increased 2.6% during the three month period, while net interest income fell 1.4% compared to last year, affected by a competitive environment. Net earnings from Spain reached €356 million, up 21.5% compared to the previous year.

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