Barcelona - Arabstoday
Bankia\'s trading suspension has reportedly been lifted. The order was imposed on Friday after Spain\'s fourth-largest lender asked the government for a bailout. The UK’s beleaguered high street will not recover for another three years and will underperform for the rest of the decade, according to leading economic commentators.Retailers will have to weather a “tough trading environment” as householders’ hoarding of cash and debt repayment mean consumer spending will fail to return to pre-recession levels before at least 2015. The forecast from the Ernst & Young ITEM Club suggests the worst of the recession could be behind us but warns a recovery could be derailed by consumer habits and put under renewed pressure by rapidly increasing mortgage costs.The damage from this double-barrelled contractionary shock on a fragile Spanish economy is before our eyes, conforming with precision to textbook time-lag theories. Private sector credit has fallen for 18 consecutive months. Industrial output fell 7.5pc in March. Brussels expects the economy to shrink 1.9pc this year, with the crunch yet to come. Unemployment has reached 24.4pc, or 32pc in Extremadura. More than 1.5m households have no earner at all. They have exhausted their benefits, surviving on savings and - for now - on €420 a month in back-stop support. Faced with such woes, any sovereign country would call for full engine reverse with every policy lever. The Faustian Pact of EMU allows no such escape. Europe has ordered premier Mariano Rajoy to cut the budget deficit from 8.9pc to 5.3pc in a single year, four times the therapeutic pace.Christine Lagarde, head of the IMF, has been forced to express her sympathy for the Greek people after receiving 10,000 messages on Facebook, many of them obscene. Politicians and irate locals had vilified her for saying the country was a nation of tax dodgers.Reports this morning suggest Spain may recapitalise Bankia with Spanish government bonds in return for shares in the bank which last week asked for rescue funding of €19bn.Bankia could use the sovereign paper as collateral to get cash from the European Central Bank, forcing the ECB to get involved with restructuring Spain\'s banking sector, laid low by lending to property developers in a boom that ended in 2008.