Spanish Prime Minister Mariano Rajoy risks irking the European policy makers he needs on his side after he extended unemployment benefits to avoid stoking social unrest.
Rajoy said yesterday his government will continue to make payments to the long-term unemployed, extending for six months a benefit adopted by his Socialist predecessor three years ago that was due to expire today. Rajoy, who reiterated he may consider seeking European help to tame 10-year bond yields hovering near 7 percent, didn't say how he'd pay for the measure he described as "just."
The premier is trying to head off protests from Europe's largest army of unemployed as his popular support sinks. The plan to increase spending two weeks after European Central Bank President Mario Draghi offered to wade back into bond markets threatens to undermine his best way of bringing down borrowing costs from near levels that prompted Greece, Portugal and Spain to seek bailouts.
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