By conceding power to regional parties, Spain's government may find it more difficult to make it into European monetary union. Jules Stewart reports
On the day Spain's centre-right government took office, it found out the hard way the high cost of shooting from the hip. Even before he was sworn in, foreign minister Abel Matutes said in an interview that if Spain failed to meet the Maastricht convergence criteria on time, the clock should be stopped to allow it a chance to catch up.
The market scratched its head and pondered the implications of this Eurogaffe. But it reacted swiftly and mercilessly the following day, when finance minister Rodrigo Rato, pressed for a comment on his colleague's remarks, said he believed the foreign minister's statement to be "realistic".
In two hours the benchmark 10-year Bono was down half a point and the Deutschmark exchange rate fell from 83.4 to 83.85.
"They [the new government] have spent the last 13 years in opposition saying whatever was politically expedient and knowing that it would have no impact abroad," says a Spanish banker. "Now they've learned that it's a different ball game.
