The yield or interest rate on Spanish debt surged up to a new high of 7.3% yesterday. At that level the cost of the interest on its loans would eventually make Spain insolvent.

Just two weeks after it agreed a 100 billion euro bailout for its banks. Speculation is growing that the sovereign itself might need to be bailed out too. Yesterday Fidelity estimated Spain might need another 300 billion euros over three years to meet its borrowing needs, given that the door to the bond market is now essentially closed.

Javier Diaz-Giminez, professor of economics at the I.E.S.E Business School in Madrid, explains the outlook for the Spanish economy.

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