18 Apr, 2012 @ 18:30
1 min read

New bailout fears

By James Bryce

FEARS continue to grow that Spain may need an emergency bailout.

It comes after borrowing costs inched ever closer to the level that led to three other European countries to require help.

Lending costs on 10-year bonds rose above six per cent for the first time this year, with economy minister Luis de Guindos admitting the country was back in recession.

The increase means Spain is now perilously close to the seven per cent mark, which proved to be the tipping point for Portugal, Greece and Ireland.

The news led to British banks losing a combined 2.5 billion euros in market value on Monday as investors worried about the knock-on effect.

The rise in Spain’s bond yields (to 6.2 per cent) caused panic for the eurozone as the country’s 1.1 trillion economy is seen as too big to bail out.

And while the International Monetary Fund (IMF) has predicted the eurozone recession will be ‘milder than forecast’ this year, new risks are expected for Spain whose economy will shrink by 1.8 per cent.

Japan has moved to ease the impact of the eurozone crisis on the global economy by pledging $60bn of loans for the IMF.

Britain is likely to be asked to stump up £10 billion to prop up the fund.

But it does not appear that this will help Spain in the short term according to analysts.

“We’re back in full crisis mode,” said Lyn Graham-Taylor, a strategist at Rabobank.

“It is looking more and more likely that Spain will need a bailout.”

Unemployment in Spain is the highest in Europe with a record 4.75 million out of work, including half of its under-25s.

Eloise Horsfield

DO YOU HAVE NEWS FOR US at Spain’s most popular English newspaper - the Olive Press? Contact us now via email: [email protected] or call 951 273 575


  1. Spain may need a bail out but the language coming out of the ECB is that thy are not going to get one because they know they cannot afford to bail out Spain. Effectively Spain is on it´s own and has only two options cut, cut and cut again till the patient dies or leave the single currency, we all know the latter is not going to happen so better start writing the obituary.

  2. I totally agree with you Peter, Spain is far to big to bail out and no they wont leave the single currency but what is making things worse is that it’s affecting the markets because investors are too scared to invest in something that isn’t safe with no returns but also Spain wont admit it is so much difficulty and that is partly why they are on their own in this mess.

  3. They have created much of this mess themselves. They do not look like they are changing their attitudes to me. Who wants to invest in Spain beit business or holiday property. I think I read that if a Company makes someone redundant in Spain they have to pay 33 weeks for every year they have worked there. Who wants to set up a business on those terms, easier to come to the UK where we have no rights. It is not much fun being an employee in the UK, you don’t know if you have a job from one month to the next. Maybe better than having no job though.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Previous Story

It’s as simple as ABC

Next Story

Status Quo’s Rick in film debut

Latest from Business & Finance

Go toTop

More From The Olive Press

Spain's Pedro Sanchez wants to continue VAT cuts on food into the summer

Spain’s Pedro Sanchez wants to continue VAT cuts on food into the summer

SPAIN’S Prime Minister, Pedro Sanchez, has said that he wants
European Central Bank FINALLY lowers interest rates - but mortgage holders in Spain may struggle to notice it

European Central Bank FINALLY lowers interest rates – but mortgage holders in Spain may struggle to notice it

THE European Central Bank(ECB) cut interest rates on Thursday by