Benoit Coeure, an executive director of the ECB, said the bank could restart its sovereign bond buying programme in a move likely to antagonize Germany but relieve a spiralling political, economic and social crisis in Spain reports The Telegraph.
Mr Coeure said that market fears over Spain were “not justified” but he added: “Will the ECB intervene? We have an instrument, the securities markets programme [SMP] which hasn’t been used recently but it still exists.”
Mr Rajoy delivered a strongly-worded speech to parliament insisting that it was “as clear as day” that Spain would not need a Greek-style bail-out.
But in recognition that the country is losing market confidence, he appealed to other European leaders to be “careful with their comments” and remember that “what is good for Spain is good for the eurozone”.
Mr Rajoy said that Spain’s 2012 deficit target of 5.3pc of GDP was “unconditional” and that the country should not listen to the “noise” or get distracted from its mission.
But Spanish economists warned that the austerity measures were crushing the economy and could spark civil unrest. In opinion pieces in Spanish papers including El Mundo and El Confidencial, economists said the German-led austerity plan was not tackling the root of the crisis nor taking into account the resolve of Spanish trade unions.