French president Francois Hollande and Spanish prime minister Mariano Rajoy have both pledged total committment to the euro after talks in Madrid.
Spain is the fourth largest economy in the eurozone but is in recession. Unemployment is the highest in the EU and there are fears that it might soon have to ask for a full bailout. Its problems have driven up the country’s borrowing costs.
“Prime Minister Rajoy and myself, we are both committed to the integrity and permanence of the euro”, President Hollande told a press conference. “And it’s very important that not just the people, but more so the markets who are watching us, are also convinced of this permanence… of the cohesiveness of the project”.
The Spanish prime minister is finding it increasingly difficult to balance the books in the face of a deep banking crisis sparked by the collapse of the construction industry.
“I’ve had to put up taxes in circumstances where I would never normally have done so,” he said. “But I did it because the duty of the government is always to act in the general interest, and therefore to correct the deficit and make reforms is crucial if we want the economy to grow and create employment.”
Earlier this week Catalonia asked Madrid for a 5 billion euro bailout and Valencia is asking for 4.5 billion. If granted that would mean 2 of Spain’s provinces using up over half of a fund set up to help 17 of the country’s autonomous regions.