Spain's Rajoy urges new euro zone fiscal body

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Spain's Rajoy urges new euro zone fiscal body

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Spain wants the euro zone to set up a new authority to harmonise national budgets across all 17 EU members that use the currency.

The Spanish prime minister made the call as demonstrators protested against mismanagement at the country’s fourth largest bank, Bankia, recently bailed out with 19 billion euros of government money.

Mariano Rajoy played down Spain’s mounting debt crisis, but urged the EU to move closer to integration and transferring more sovereignty.

“That means a compromise,” he said, “to create a new European fiscal authority which would guide fiscal policy in the euro zone, harmonise the fiscal policy of member states and enable a centralised control of public finances.”

Overspending and a property crash that hit Spanish banks have sent the country’s borrowing costs spiralling, threatening to derail the single-currency.

Several EU countries have already signalled they are not prepared to hand over parliamentary budget powers.