Borrowing cost surges for Spain

Jittery debt markets turned on Spain again yesterday as the eurozone struggler's borrowing costs surged back above the 7 per cent danger mark.

Investors were spooked by the higher costs Madrid was forced to pay to raise €3bn (£2.4bn) in two, five and seven-year debt, pushing the nation closer to a full-scale bailout. Spain tapped European rescue funds for a €100bn bailout of its crippled banks last month.

The auction came as Spanish politicians debated a package of VAT hikes and civil servant pay cuts which have triggered protests.

Treasury Minister Cristobal Montoro warned: "It is time to call a spade a spade. Financing public services with more deficit and more debt will doom us."