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The value of the euro slumped to a new low today, as investors continued to worry about Spain’s troubled economy – despite news a bail-out plan for Spanish banks had been finalised.
It is thought there is still a great chance Spain will need a complete sovereign bail-out. Many of its regions are becoming bankrupt and turning to Madrid, where the pressure continues to mount.
The yield on Spanish government 10-year bonds hit a new euro-era record of 7.5pc this morning on fears that one of the eurozone’s biggest economies was about to go down the drain.
Spain has to raise 26bn euros in long-term debt to keep it afloat until the end of the year. The nation, has, however, effectively been shut out of markets. Due to the dire problems in many of its regions, the required repayment figure could end up being much higher.
With unemployment at 25 per cent and a public increasingly opposed to austerity measures, the agreement reached Friday afternoon to rescue Spanish banks was not enough to have a positive result on markets.
Instead, shares slumped. For as the International Monetary Fund (IMF) noted last week, “the viability of the monetary union is at stake”.
