Complacent Europe must realise Spain will be next

Commentary feature. Spain had an extreme property bubble before the economic crisis, and prices have so far fallen only moderately, writes Wolfgang Münchau.

The mix of high external indebtedness, the fragility of the financial sector and the probability of further declines in asset prices increase the probability of a funding squeeze at some point. And that means that Spain will be the next country to seek financial assistance from the EU and the International Monetary Fund.

The author concludes 'As for the large number of official statements that Spain is safe, I think they are merely a metric of the complacency that has characterised the European crisis from the start'.

ESO: Background information: Dearer borrowing causes jitters on periphery http://www.europeansources.info/record/dearer-borrowing-causes-jitters-on-periphery/

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