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."
Culinary experts in The Netherlands thought it was 'fresh' and 'tasty'
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