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.
  

