SPAIN could become the next European country to ask the EU for a bailout, economists warn.
The risk premium on Spanish bonds rose after Ireland followed Greece in accepting billions of emergency loans from the EU and the IMF.
Markets are now worried that the weakness of Irish and Greek financial systems will have a knock on effect on Spain.
Spanish finance minister Elena Salgado said on Friday that there’s no reason to compare Spain with Ireland.
She added, however, that the markets “demand that we be consistent in the reforms that we have announced”.
Spanish debt levels are well below those of Ireland and Greece but the country’s weak point is unemployment.
About 20% of Spanish workers are out of work, one of the highest rates in the EU.
Economic growth also remains anemic, with GDP remaining flat in the third quarter of the year.
The economists believe the Madrid government will now have to adopt further austerity measures to keep the markets’ goodwill.