SPANISH EMPLOYERS WORRIED BY HIGH INTEREST RATES
The head of Spain's employers'
federation, Jose Maria Cuevas, said employers were worried
about the government's monetary policies because high real
interest rates were hampering investment.
    He told a news conference wage pacts signed so far this
year were not endangering the government's five pct inflation
target. The government's perceived need to control inflation by
keeping a tight rein on credit was unnecessary, he said.
    High real interest rates were attracting an influx of
speculative foreign capital which was undercutting the
government's target for monetary growth, Cuevas said.
    Spain's most closely-watched measure of money supply,
liquid assets in public hands, grew at an annualised rate of 17
pct in March, against 11.4 pct in December last year and a
target range of 6.5 to 9.5 pct for 1987.
    To combat this, the Bank of Spain has raised its call money
rate 14 times so far this year, to 14.5 pct at present from
11.8 at end-1986.
    Cuevas said employers were heeding the government's call to
hold wage increases to its five pct inflation target this year,
with increases from salary reviews awarded last year and new
wage pacts averaging 5.6 pct in the first quarter of 1987.
    These agreements covered less than 40 pct of Spanish
workers, Cuevas said, with the rest still in wage negotiations.
    He said Spain's current wave of strikes mainly affected the
state sector, where the government is trying to impose its five
pct wage ceiling.
    Cuevas said employers were also worried about the trend in
Spain's foreign trade balance. The trade deficit in the first
two months of 1987 totalled 233 billion pesetas, a 68 pct
increase over the corresponding period last year.
    However, employers did not favour a devaluation of the
peseta to correct the imbalance.
 REUTER
