The cost of borrowing for Spain increased to 6.1% on Monday and this has once again raised the spectre of a bailout.
The nation’s cost of borrowing has been rising steadily over the past four months and investors are worried by data showing Spain’s banks are currently entirely dependent on emergency ECB loans.
At the other end of the scale, the yield on 10-year bonds from Germany, the eurozone’s strongest economy, is at a record low of 1.73%.
Spain is suffering from a deep economic slump brought about by the collapse of its property and construction markets and has the highest unemployment in Europe and with half of the country’s under-25s out of work.
The Bank of Spain reported recently that the county’s economy contracted in the first quarter of the year, although it did not say by how much. The economy shrank by 0.3% in the three months to December, so this additional contraction implies that Spain’s economy is once more in recession.
A borrowing cost of 7% is seen as unsustainable and is generally considered the level at which a bailout is inevitable.