With Portugal now negotiating the terms of its bailout, the eurozone now seems to be waiting for the last shoe to drop in Spain, Europe’s fourth largest economy. In mid-March, Moody’s downgraded Spain’s debt rating (which measures its ability to pay back its debt), indicating that it had doubts about the country’s ability to stave off a default.
Spain insists that although its economic growth is slow, it will not need a bailout, partially because of significant spending cuts and other financial reforms. Similar things were said by Ireland and Portugal before they finally agreed to bailouts. According to Capital Economics, the price tag for a Spain bailout would likely order on €420 billion ($600).
