By James Bryce
SPAIN’S new leader Mariano Rajoy is under increasing pressure to reveal plans to deal with the deepening recession.
EU leaders are already demanding radical reforms in a bid to restore market confidence.
It comes as Spain recorded the highest interest rates for 14 years, with 2.98 billion euros of the country’s debt being sold at auction last week.
The move was part of a wider effort by Italy, Spain, France and Belgium to refinance 17 billion euros of bonds.
But as Spain has seen zero growth over the last quarter and has the highest unemployment figures in the industrialised world, urgent moves are needed.
It has even been hinted that Spain might be forced to revert back to the Peseta.
In response, Rajoy has so far given only a vague outline of his priorities, which include Europe, the public deficit and labour reform.
Sources close to Rajoy even claim he is considering applying for international aid as one option to shore up its finances.
However, the International Monetary Fund (IMF) has denied that Spain or Italy have asked to be rescued.
Rajoy – who is against the euro zone being turned into a two-tier system – will not be officially sworn in until December 20.
But Rajoy and his predecessor Zapatero have met to discuss the possibility of bringing the formation of the new government forward to appease the markets.
Meanwhile, the EU has called for Rajoy to introduce immediate changes in the labour market in an effort to reduce what it describes as the ‘unsustainable’ unemployment rate.