The risk premium investors demand to hold Spanish 10-year debt rather than German bonds rose on Friday to its highest since the launch of the euro at 546 basis points. In another day of market turmoil, German bond yields fell to all-time lows, with investors effectively paying Berlin to park their money in its coffers at negative real interest rates, while the borrowing costs of Spain and Italy are again becoming prohibitive. Ireland has been held up by its European partners as the model student for austerity, implementing an 85-billion euro ($106 billion) EU/IMF bailout to the letter as others, notably Greece, remained the centre of euro zone debt concerns.įinancial markets are more worried about accelerating capital flight from Spain, which is resisting pressure to seek international assistance for its banks, and a repeat general election in Greece on June 17 that could lead to that country becoming the first to leave the euro area. Global slowdown fears send European shares to 6-mth lows But we also recognise that because of negative economic developments it will be difficult for Spain to reach its goals,” spokesman Johannes Blankenheim told a news briefing.Īsked if that meant Madrid should be given more time, he replied: “I think that’s what I’ve been saying. “We support Spain in its efforts to implement the necessary measures. jobs data.Īsked about a European Commission call to grant Spain more time to reduce its deficit, a German Finance Ministry spokesman said Berlin understood Madrid’s difficulties in trying to cut its shortfall to 3 percent of gross domestic product in 2013. and German government bonds amid growing worries over Spain’s parlous finances and debt-stricken Greece’s uncertain future in the single currency area, compounded by weak U.S. Irish voters backed a European budget discipline treaty by a 60-40 percent vote in a referendum, a widely expected result that removed one political risk for the troubled currency area but left several bigger ones. Europe's single currency must be supported by responsible fiscal policies and closer cooperation between countries in the euro zone to survive and prosper, Rehn said on Thursday. European Economic and Monetary Affairs Commissioner Olli Rehn delivers a speech during the Brussels Economic Forum conference, May 31, 2012.
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