Redwood: The pain in Spain

ECONOMICS

John Redwood outlines the problems facing Spain following S&P's decision to downgrade the country's credit rating, and considers whether a Spanish collapse could mark the next phase of the eurozone crisis.

In recent weeks markets have become more concerned about Spanish finances than Italian ones, and the news this morning Spanish debt has been downgraded by credit ratings agency S&P brings more speculation of a deepening crisis. Spanish electors have played their part and voted in a new government even more committed to the austerity policies of euroland than the outgoing one. The new government willingly signed up to the new Treaty of the 25 to enforce more austerity and budget discipline on themselves. Then things started to go wrong. The government confessed there had been slippa...