SPAIN has vowed it ‘won’t follow Portugal’ in asking for a bailout.
Elena Salgado, the Spanish economy minister, has reassured investors that the country – which has the fourth largest economy in the euro zone – will not follow its ailing neighbour.
She announced on national radio that the need for outside help “is absolutely ruled out” because the Spanish economy “is more diversified, more powerful with sound basics, and is much more competitive” than Portugal’s.
Her confidence was lifted by a 4.1bn euro sale of Spanish government debt, suggesting the markets do not immediately fear contagion.
The news comes just a day after Portugal became the third European Union country – after Greece and Ireland – to formally request an emergency bail–out.
Addressing the nation last night Portugal’s caretaker Prime Minister Jose Sócrates, said: “I have always said that asking for aid would be the final way to go, but we have reached the moment.”
It is understood that the rescue fund could be as high as 80 billion euros.
But for the moment few economists believe Spain is next in line.
Earlier this week Spain was given the backing of the International Monetary Fund.
Dominique Strauss-Kahn, head of the IMF, said: “I don’t believe that the Spanish government needs any type of financial aid.”
The comments will be seen as a vote of confidence that austerity measures imposed by Madrid could be working.
Nevertheless, Spain faces extremely difficult times in the years ahead with unemployment still standing at 20 per cent.