Worried about possible contagion from Spain, Italy's PM Mario Monti expressed his concerns a couple of weeks ago at a conference.
The Telegraph: "It [Spain] certainly made decisive reform of the labour market but it did not pay the same attention to public finances," Mr Monti said at a conference in Cernobbbio, Italy.
"This is causing us a big concern because their yields are rising and it wouldn't take much to recreate the contagion that would also involve us," Mr Monti added.
Monti had since apologized. France had made similar comments with hopes of pressuring Spain to focus more on fiscal consolidation. Clearly annoyed, the Spanish Prime Minister Mariano Rajoy fired back today.
Expatica: European Union countries must be "prudent" when making comments about Spain's economic problems, Spanish Prime Minister Mariano Rajoy said Wednesday, following criticism from France and Italy.
"We all have our problems and we are working to find a solution to ours and also to help the eurozone. We expect that other countries should do the same, that they be prudent in their statements," he said.
Rajoy did not specify exactly who he was referring to in his comments to lawmakers from his conservative Popular Party, saying only that he was talking about "statements made in the European Union on the part of certain leaders".
Italy and the Eurozone as a whole are clearly nervous about Spain sparking another liquidity crisis. Monti has made
quite a bit of progress in Italy (with Italian long-term yield now firmly lower than the Spanish yield), but he may be looking at a massive setback driven by Spain. He should be angry.
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| Italy 10yr yield minus Spain 10yr yield |
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