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Debt Crisis: Spanish borrowing costs higher as country moves into recession

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Italian Prime Minister Mario Monti. Photo: Getty Images

Italian Prime Minister Mario Monti. Photo: Getty Images

Italian Prime Minister Mario Monti. Photo: Getty Images

BORROWING costs for Spain have edged towards 6pc as the country’s central bank governor said the economy is not likely to see a recovery soon.

In addition, Spain’s economy minister Luis de Guindos has all but admitted that the country is back in recession.



There were also negative reports from Italy with the country’s economy expected to contract more than expected.



Last month, Italian Prime Minister Mario Monti told a conference in Italy last month that Spain had not paid as much attention to public sector reform as it has to labour reforms.



He said: “This is causing us a big concern because their yields are rising and it wouldn't take much to recreate the contagion that would also involve us.”



Miguel Ordóñez, Spain’s Central Bank governor, said today that the country needs more time to implement economic reform and added that the European Central Bank emergency funding had bought the country some time.



However, Spain also needs to reduce its budget deficit target in line with other eurozone countries.