The European single currency is facing its greatest test ever with Brussels admitting that investors now doubt the euro zone can survive its massive debt problems.
European Commission President Jose Manuel Barroso said the fact that Italy and Spain are having to pay such high levels of interest to borrow money is a cause for deep concern.
Germany – seen as stable and unlikely to default – has to pay only 2.42 percent on its 10-year government bonds.
Rome and Madrid by contrast can only find lenders by offering over six percent.
Spain is getting perilously close to the seven percent mark that caused Greece, Ireland and Portugal to need bailouts.
Spain’s Prime Minister Zapatero and his economy minister Elena Salgado have held crisis meeting seeking ways to calm investors concerns.
Greece’s second rescue package was supposed to stop the problem spreading to the region’s bigger economies: it didn’t work and Spain – the euro zone’s fourth largest economy – is too big for the EU to bailout.
Italy is the third largest and Italian economy minister Giulio Tremonti met the chairman of euro zone finance ministers, Jean-Claude Juncker, in Luxembourg – after which a European Commission spokeswoman said there had been no discussion of a bailout for Italy.