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Page last updated at 08:50 GMT, Wednesday, 6 June 2012 09:50 UK

Spanish economy needs 'good diagnosis'

The European Commission is announcing plans which offer an alternative way of saving banks that run into trouble, which would put the onus on shareholders and bondholders instead of taxpayers.

Professor Ngaire Woods, dean of the Blavatnik School of Government at Oxford University, says the main aim is to ensure that banks have enough capital to prevent them from going bust. Spain "has exhausted itself" on state aid measures, she explains.

Stefaan de Rynck, spokesperson for Michel Barnier, the EU commissioner for the internal market and services, told the Today programme that the proposals are about "long term measures".

"Spain's troubles are due to the bubble that has burst and irresponsible behaviour of the banks in the past, and we need to rout that out", he told Jim Naughtie.

Spain needs to make "a good diagnosis" of its problems, he said.

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