The ECB also warned Spanish state debt could hit 125 per cent of GDP next year if it fails to deliver half of its planned fiscal consolidation, underlining the important of the government’s increasingly unpopular deficit reduction plan.
ECB boss Mario Draghi last week said the central bank could be prepared to buy the bonds of struggling governments as long as they first request aid from the Eurozone’s bailout funds, and commit to economic reforms.
That was widely taken as a sign that Spain is in line to receive help.
But the ECB’s monthly bulletin yesterday revealed that outright monetary transactions (OMTs) “may also be considered for member states currently under a macroeconomic adjustment programme when they will be regaining bond market access.”
That suggests Ireland may be in line for help as it is close to regaining access to the bond markets, and even Greece further in the future if the country gets on the path to recovery.