| 15.6°C Dublin

Crisis rages on as Spain costs soar

THE EUROZONE crisis shows no signs of abating as Spain now takes centre stage with soaring borrowing costs.

The Spanish government was forced to pay the highest borrowing costs since 1997 at a sale of 10-year bonds, with yields a steep 1.5 points above the average paid at similar tenders this year.

However, analysts say that no amount of austerity in Greece, Italy, Spain, Ireland and France is likely to convince the markets without some dramatic action in the shorter term, probably involving the European Central Bank.

Meanwhile, Germany has rejected calls from France to increase the power of the ECB.

"I'm convinced that none of these approaches, if applied right now, would bring about a solution of this crisis," Merkel (above) said in a speech in Berlin.

Germany is reluctant to assume more liability for taming the debt crisis even as it roils France, the euro region's second-largest economy.

And separately it was revealed that only 10pc of the €60bn of unpaid tax in Greece could be collected.

The European Task Force sent to tackle the country's crisis revealed the extent of the country's problems in its first quarterly report.

However, there are ongoing negotiations with Switzerland in an attempt to retrieve some of what has been stashed in secret bank accounts there.

The German heading the Task Force, Horst Reinchenbach, acknowledged the country faces a huge challenge and, while reforms are always difficult, they are even more so under current conditions.

"Recovery levels are not expected to be high," the report admits putting it at between €6bn and €8bn.