Spain's political uncertainty harmful to investments: PM

Spain's acting Prime Minister Mariano Rajoy said on Monday the country's political uncertainty after Spain's general elections had been harmful to foreign investment.

Rajoy made the statement in an interview at a local radio station where he said politics affected economics and investment projects. "People see where to invest, as well as a Spanish investor sees what is the situation in the country where he wants to invest," Rajoy pointed out.

Spain is currently struggling to form a government after the election resulted in a hung parliament. Political parties are at odds about forming a coalition and if they fail to agree, a new election will have to be called.

Rajoy explained Spain's political situation in the wake of the general elections had left a very fragmented parliament, which had an impact on "many foreign investors," especially those from the real estate sector.

He stated the country needed a serious government as soon as possible that would not change all the policies that had had a positive impact on the economy. "If we are without a government, or we have one that reviews everything we have done, we are at risk of having a dangerous uncertainty," he said.

In line with this, the Bank of America Merrill Lynch warned on Monday about this uncertainty in its report 'Europe Economic Weekly'. According to the bank, the lack of political consensus in the country could lead to economic problems in the medium term as Spain faces important challenges such as unemployment. Endit