Spanish prime minister Mariano Rajoy made a plea for greater political and fiscal union in Europe today, urging Greeks to stick with the euro as they gear up for an election which will shape the single currency's future.
Saying Spain's business, banks and regional governments were struggling to finance themselves at current high borrowing costs, Mr Rajoy urged Europe to integrate its banking system more closely, although he did not go into details.
"Europe has to transmit to the world that the euro is an irreversible project," he said.
Spain secured a €100 billion rescue last weekend from Europe for its troubled banks, struggling with losses from a decade-long debt binge linked to a burst property bubble.
But the country's financing costs have continued to rise, bringing it closer to joining Greece in needing a full-scale bailout.
The yield on Spain's 10-year bond topped 7 per cent on Thursday, a danger level that triggered bailouts for Greece as well as Ireland and Portugal.
Mr Rajoy said Spain needed to continue to reduce its fiscal deficit.
"We cannot live beyond our means on a permanent basis," he said. "We cannot have double the number of airports as Germany, for example."
The euro zone could find itself scrambling to prevent a break-up if a radical left-wing party wins Sunday's vote in Greece. Mr Rajoy said he was convinced Greece would stick to its commitments and stay in the euro.
Reuters