Spain grapples with recession

Speculation rife that the European Central Bank could help country to ease its economic problems.

    Spain is stuck firmly in a recession for the second time in three years, with the latest figures showing the economy shrank in the first half of this year.

    There is speculation the European Central Bank (ECB) will buy the government bonds of Spain and Italy, also facing financial difficulties, forcing down their borrowing costs to prevent a full-blown bailout.

    Last month, Spain turned to eurozone partners to help rescue its banks, which are weighed down by piles of bad property loans from a construction boom that went bust in 2008.

    Eurozone countries agreed to extend a credit line of up to $123bn to Spain to shore up its banks if needed.

    The fundamental issues of debt and a lack of growth are blighting many countries in Europe.

    Barnaby Phillips reports from Madrid.

    SOURCE: Al Jazeera


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