We can't cope much longer, says Spain, as borrowing costs cripple Europe's sick economies

'We can't go on like this': Spain's Prime Minister Mariano Rajoy issued a warning over the cost of borrowing

Spain's prime minister warned yesterday that the country ‘cannot go on like this’ much longer with its current high borrowing rates.

Mariano Rajoy also urged a joint European response to keep the region’s debt problems from getting worse.

Mr Rajoy joined French President Francois Hollande in stressing their commitment to keeping Greece in the euro despite its political uncertainty.

Speaking in Paris alongside Mr Hollande, Mr Rajoy said: ‘Europe has to come up with an answer. It is a must, because we cannot go on like this for a long time, with large differences when it comes to financing ourselves.

‘It is because of these differences that the policies that we Europeans believe in, such as controlling government spending and reforms to encourage growth, ultimately have no effect.’

‘So I am going to talk about liquidity, financing and debt sustainability. For me it is the most important thing today,’ he said.

Protest: Miners stand behind burning barricades in Oviedo, Spain, as they strike against cuts in government subsidies to the sector

Anger: The miners' strike is part of a nationwide day of action

Mr Rajoy suggested the European Central Bank resume some of its emergency measures, such as buying the bonds of weak countries, which has the impact of lowering countries’ borrowing rates.
Spain, which is in recession and has an unemployment rate of nearly 25 per cent, is seeking to shore up its banking sector against market fears about the country’s financial health.

 

Today its miners went on nationwide strike in protest against cuts to government subsidies for the industry.

Its economy minister Luis de Guindos said the government will pump at least £7.2billion of public money into nationalised lender Bankia.
Many Spanish lenders are heavily exposed to Spain’s burst real estate bubble. Bankia is the worst off of all, with £26billion in toxic assets.