Spain raises the alarm over its high debt costs

Spain cannot continue financing itself indefinitely at current rates, its prime minister has warned.

Madrid has seen its borrowing costs spiral as it battles to recapitalise banks ravaged by a burst property bubble and cut a towering budget deficit.

Its short-term debt costs nearly tripled at a bond auction on Tuesday, underlining the country’s precarious finances as it struggles against recession

Speaking in parliament, Prime Minister Mariano Rajoy said he would push for European institutions to use available options to stabilise financial markets.

Maintaining his policy stance, he also stressed that Spain is determined to retain access to international market funding.

“This is the main issue about which Spain, Italy and other countries will try to take decisions,” he said.

Spain has already asked its European Union partners for up to 100 billion euros in aid for its banks. But financial markets have not eased up their pressure, seeing much of the EU’s efforts as only temporary solutions.

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