Bad economic news keeps the pressure on Spain and Italy
The outlook for two of the most vulnerable eurozone economies darkened further yesterday, as new figures showed Spanish industrial output shrinking for a sixth straight month and the Italian government confirmed it is poised to slash its 2012 growth forecasts.
Spanish industrial output fell by 5.1 per cent year on year in February, following a 4.3 per cent drop the previous month. Meanwhile, Italy's deputy economy minister, Vittorio Grilli, told reporters that Rome is preparing to make its own growth forecast "fairly consistent" with that of the European Commission, which has pencilled in a 1.3 per cent contraction in 2012.
There were further signs of stress in Italian bond markets too, with Rome's one-year borrowing costs doubling at a short-term debt auction. The Italian government was forced to pay a rate of 2.84 per cent to sell €11bn (£9bn), up from 1.4 per cent at a previous sale in March.
The longer-term borrowing costs of both countries, however, eased slightly yesterday, after their alarming jump on Wednesday. Yields on 10-year bonds on Spanish debt fell from 6 per cent to 5.85 per cent, while 10-year Italian yields declined from 5.7 per cent to 5.5 per cent.
The improvement in Spain's debt markets came after the European Central Bank board member Benoît Coeuré suggested that the ECB might restart its bond-buying programme to bring down Spanish interest rates if necessary.
Mr Coeuré said: "We have an instrument, the securities markets programme, which hasn't been used recently but it still exists."
The programme was used by the ECB to buy up some €200bn of Italian and Spanish debt last summer.
Meanwhile, Spain's prime minister, Mariano Rajoy, yesterday warned other European leaders to be more careful with their public comments about his country's predicament.
"We hope that they assume their responsibilities and are more cautious in their statements," he said. "We don't talk about other countries. We wish other EU and euro zone countries the best."
- 1 Game of Thrones season 6: Jon Snow theorists believe Ned Stark's son may have a twin sister
- 2 Artist takes LSD, draws herself over different stages of the 9-hour trip to show its effects
- 3 Miley Cyrus address Robin Thicke VMA controversy: ‘He wanted me as naked as possible, but I got the heat because I’m a woman’
- 4 iPhone 6s camera: features to include 4K video camera and flash for selfies
- 5 A pint of water every day is the key to losing weight, scientists say
Miley Cyrus address Robin Thicke VMA controversy: ‘He wanted me as naked as possible, but I got the heat because I’m a woman’
Most expensive city to live in for expatriates: Luanda, Angola takes number one spot with Hong Kong and Zurich in top three
If Surrey were Syria: Social experiment shows what it's like to live under siege
Irish tourist filmed fighting with shopkeepers in Turkey says they 'messed with the wrong man'
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal get peerages
Dresden riots: Protesters in Germany attack refugee buses shouting 'foreigners out'
France train shooting: US soldiers speak of the moment they stopped gunman and 'beat him until he was unconscious'
Labour leadership: Jeremy Corbyn accused of 'deluding' young supporters with 'claptrap'
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
iJobs Money & Business
£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...
£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...
£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...
£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...