Thursday

9th Feb 2023

Spanish borrowing costs soar

  • Spain - the latest to be dragged into the crisis (Photo: marcp_dmoz)

Eurozone woes deepened Thursday as Spain and France were forced to pay sharply higher interest rates than usual and anti-austerity protesters in Italy and Greece clashed with police.

Spain was hoping to raise some €4 billion by selling 10-year government bonds but had to settle for little over €3.5 billion. It paid an interest rate of slightly less than 7 percent - the highest level since 1997 and 1.5 points above the average paid at similar tenders this year. It is a level of borrowing cost at which other eurozone countries like Ireland and Portugal had been forced to seek financial assistance from abroad.

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Voters in Spain are set to oust the current socialist government in elections on Sunday and replace it with a centre-right leadership that has indicated it will push for sharp spending cuts.

France, too, had to pay a relatively high price for government bonds as it raised some €7 billion at an interest rate of around 3.6 percent - a level still considered sustainable but significantly higher than the 3 percent earlier this month.

In several cities in Italy and Greece, meanwhile, protesters have had run-ins with the police as they demonstrated against the newly appointed technocrats now in charge of their respective countries.

Thousands took to the streets in Milan and Turin against the far-reaching austerity measures announced by what they called a "bankers' government" led by economist Mario Monti. "We don't want the banks to rule," they reportedly chanted. Things got violent when police stopped the protesters from approaching Bocconi university, chaired by Monti.

Monti, sworn in on Wednesday and set to win a confidence vote in parliament on Friday, said the three pillars of his government's policy would be budgetary rigour, economic growth and social fairness.

In Athens, tens of thousands of Greeks joined a protest rally on Thursday marking the anniversary of the student uprising that ultimately led to the overthrow of the military junta that ruled Greece from 1967 to 1974.

Reuters reports that police fired teargas at black-clad youths as protest marchers beat drums, waved red flags and shouted: "EU, IMF out!"

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