By Hugo Duncan
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Borrowing costs in Italy soared yesterday as prime minister Mario Monti admitted he was ‘worried by the situation of emergency’ engulfing the eurozone.
Rome managed to sell €6.5billion (£5.25billion) of one-year bonds to investors â€" but the yield jumped to a punishing 3.97 per cent from 2.34 per cent at a similar auction last month.
The surge in interest rates came as investors worried that Italy will be the next eurozone country after Spain to seek a bailout to save the country from collapse.
Europe's Lehman moment? The Organisation for Economic Cooperation and Development has lambasted Europe's leaders for failing to get to grips with the crisis
The £80billion lifeline for Spanish banks agreed at the weekend has done little to allay fears that the region is heading for financial catastrophe.
A poll by Reuters showed that 35 out of 59 analysts across Europe and the US expect Spain to require a full-blown state bailout within the next 12 months. The poll also showed 22 out of 59 do not expect the single currency to survive in its current form.
Greece, Ireland and Portugal have already received international bailouts in a bid to stop the break-up of the euro.
Monti, an unelected technocrat who replaced disgraced Silvio Berlusconi in November, insisted his unpopular economic medicine was essential to stop Italy becoming the next victim of the crisis.
‘We should use these new difficulties to double our efforts both on the European front and within Italian politics,’ he told parliament in Rome.
Spanish PM Mariano Rajoy said Europe faced a ‘battle’ to save the single currency. ‘Europe is undergoing the gravest crisis since its creation,’ he said. ‘The euro is at risk.’
Greek elections on Sunday could see Athens head for the exit if angry voters back left-wing parties opposed to the latest bailout deal, which imposed some of the toughest austerity measures seen in Europe for decades. Greeks are pulling their cash out of banks and stocking up with food ahead of the vote â€" which polls show is on a knife-edge.
The Organisation for Economic Cooperation and Development lambasted European leaders for failing to get to grips with the crisis.
Pier Carlo Padoan, the watchdog’s chief economist, said: ‘The current situation reflects the fact that it is not clear to markets what political leaders and policy makers want to do. It is therefore urgent to break this vicious cycle.’
It came as figures showed output from eurozone factories tumbled 0.8 per cent in April as the economic malaise deepened.
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There has never been a more appropriate time for a British referendum on our imposed membership of the Titanic sports and Social club !. I fear we will crash into something big and cold before we take to the UKIP lifeboats !.
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The pain of a Eurozone breakup is FAR better than a contagion rise in violent National Socialism in Europe once again. Euro 'leaders' please own up, give up let democracy have it's good way.
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Eventually the Bank of England will wake up to the fact that they are the "odd one out" Yes. Interest rates are soaring in Italy, and the rest of Europe. But not here. Even an increase of half a percent would be a step in the right direction. Please.
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when in a few weeks, when even France and Germany have had enough, if you ever hear some people in a huddle in a back room somewhere saying, i have an idea ....... smack them hard.
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