SPAIN’S foreign minister has backed calls for Europe’s rescue fund to be boosted to one trillion euros.
Jose Manuel Garcia-Margallo also called for sweeping changes to the structure of the eurozone, and urged the ECB to increase bond purchases.
It follows demands by Italy’s prime minister Mario Monti for the new European Stability Mechanism (ESM) to be doubled in an effort to restore investor confidence in southern European debt.
“The European Central Bank can do much more than it has done: it has bought European debt equal to just two per cent of GDP while the Bank of England has done 20 per cent,” Garcia-Margallo said.
Spain is currently falling into a double-dip recession, with the International Monetary Fund (IMF) forecasting that Spain’s economy will contract by 1.7 per cent this year.
Ratings agency Moody’s recently downgraded Valencia’s credit rating by two notches over fears about mounting debt, while nine other region’s including Andalucia risk a similar fate.