Spain could be too big to bailout

People stand at the Puerta del Sol square in central Madrid on June 7, 2011 during a protest to decry mainstream political parties, soaring unemployment, corruption and welfare cuts.

STEVE CHIOTAKIS: Tens of thousands of Greek workers are off the job today and striking in the streets -- mad about more big pension and benefit cuts being proposed to get more European help. Greek troubles of course are rippling through the global economy.

And we continue our look at how things could go from bad to worse in other countries because of the Greek problems. The BBC's Sarah Rainsford has more from Madrid.


SARAH RAINSFORD: For a long time, investors have lumped Spain alongside Greece as one of the weaker European economies to watch out for. For one thing, it's unemployment rate is over 20 percent.

The government's spent the past year trying to prove it's not on the brink -- passing deeply unpopular wage and budget cuts. Last month, tens of thousands of young Spaniards camped out on the streets in protest. Spain's Prime Minister has promised the cuts are over. But if Greece does default, that could be a hard promise to keep.

Ismael Sanz is professor of economics at Madrid's Rey Juan Carlos University. He says unlike Greece, Spain could be too big for Europe to bail out.

ISMAEL SANZ: This would mean a big impact on the European economy. The European Union will try to do everything they can to avoid having to give Spain a bailout.

But Professor Sanz says if Greece does survive this crisis, Spain would get some breathing space. Time to get its own economy back on track. Time too to start creating more jobs for young Spaniards.

In Madrid, I'm the BBCs Sarah Rainsford, for Marketplace

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