Spain could be locked out of the markets, says Mariano Rajoy

The prime minister of Spain called for European leaders to publicly back the so-called 'sinner states’ amid fears that contagion from Greece could trigger a highly-anticipated Spanish banking crisis and then a bail-out. Mr Rajoy told state television there was “a serious risk we will not be able to borrow - or borrow at astronomical prices” unless they succeeded in bringing down the debt levels and regaining market confidence. “All these measures are to get out of the hole we find ourselves in,” he said. He also fired a warning shot a Brussels after days of speculation about the break-up of the euro. “I would like a clear, strong message in defence of the euro project and an affirmation of the sustainability of the public debt of all the European countries that are subject to discussion at the moment,” he said. Analysts at Citigroup said Spain would “probably require some form of troika programme in the course of the year.” In Madrid, efforts continued to shore up Spain’s stricke banks. Shares in Bankia, the part nationalised lender, dropped more than 10pc after the Bank of Spain demanded a “stronger plan” for its recapitalisation.