Fear again focuses on Spain

The Spanish stock exchange, the Ibex, was down more than five per cent at one point Photo: REUTERS/Susana Vera

Flashing red numbers and downward graphs on traders' screens around Europe are hardly unusual these days as the financial markets around the continent are bumped around by each twist andturn in the Eurozone crisis. But while Europe's policy makers have pretty much packed up for the summer, the problem they have been trying and many would say failing to come to grips is gathering pace. Fear again focuses on Spain.

In just one day:

  • Spain's government had to pay more to borrow cash from the markets than at any time since the euro was created - more than 7.5 percent, around five times what the UK government has to pay.
  • The slide in Spain's economy was revealed to be speeding up - GDP contracting by 0.4 percent in the last quarter
  • The Spanish authorities banned short selling - where traders try to make money betting on falling share prices - reflecting concern about the potential level of panic in the markets
  • Expectation grew that other Spanish regions will follow Valencia and ask the national government for financial help because they can't pay their bills
  • The Spanish stock exchange, the Ibex, was down more than five per cent at one point, although it pulled back by the end of the day.
Spain's Economy Minister Luis de Guindos today denied the country would need a bailout Credit: REUTERS/Susana Vera

All that, despite eurozone leaders agreeing an enormous bailout for Spain's banks. As the government is simply finding it hard to make ends meet, bolstering the banks is not enough to calm the markets.

In what appears eerily like an echo of politicians from other countries, Spain's economy minister, Luis de Guindos, today denied the country would need a bail out. The evidence suggests however the moment when that will happen is coming ever and ever closer.