Osborne criticises Spain bailout

George Osborne has said the failure of the Spanish bank bailout is "depressing" as the banks had to be directly recapitalised into to convince the markets of its credibility. Spain's borrowing costs have hit the highest level for 13 years.

Live updates

Advertisement

Osborne: Failure of Spanish bailout is 'depressing' and 'frustrating'

The Chancellor George Osborne has told an event hosted by The Times that the failure of the Spanish bank bailout is "depressing" and "frustrating" as he warned that the banks needed to be recapitalised directly in order to convince the markets:

What is depressing ... is that everyone said to the eurozone that if you do not directly recapitalise these banks, if you do it via the Spanish sovereign, then you are not going to convince the market the Spanish sovereign is entirely credible... and yet they went ahead down this route.

The frustrating thing about all of this ...if we are always in our reaction to every problem is ‘too little too late, not quite enough,’ then we are going to have a long period of uncertainty and fragility within the eurozone.

European Central Bank's outlook on the Euro crisis

In a statement released by the European Central Bank, the financial body says the overall outlook for financial stability remains "challenging" in the Euro area.

Some of the key aims made in the statement include:

  • Member States should step up their initiatives to strengthen the fiscal and banking components of a robust monetary union.
  • There remains a clear need for a continued focus on tackling the root causes of the crisis, and a comprehensive response remains key to decisively ending a spiral of systemic risk augmentation.
  • An effective use of the financial backstops is needed to halt the downward spiral of self-fulfilling dynamics in the pernicious interplay between sovereign, banking and macroeconomic forces.

Advertisement

Spanish bailout is a 'temporary solution' only

JP Morgan Global Strategist Tom Elliot says the Spanish bailout is a temporary solution that is "useful" but not long-term. Mr Elliot says the bailout has stopped a fully blown "systemic European banking collapse" that limits the risk of contagion.

Mr Elliot says the bailout is like "two drunks propping each other up": it is not sustainable and the collapse of one must be engineered.

Load more updates Back to top

Latest ITV News reports