Spanish Prime Minister Mariano Rajoy says that his nation's economic plight is one of "extreme difficulty" and that the country may need an international bailout.
The Spanish leader told a meeting of his People's Party on Wednesday that those who do not understand the severity of the country's problems are "fooling themselves." He has suggested that Spain might need a financial rescue package, following European bailouts already handed to Greece, Ireland and Portugal.
Rajoy defended the austerity measures his government has imposed in an effort to cut the government's deficit spending. But the country's borrowing costs have risen since he last month unilaterally eased the government's deficit target for 2012, in defiance of a European Union mandate.
Investors showed weak interest in Spanish debt Wednesday. The government sold $3.4 billion in bonds - just above the minimum it sought to sell. But the interest rate on the notes increased over the last time Spain sold bonds in September.
Nearly a quarter of the Spanish workforce is unemployed, the highest in the 17-nation euro currency bloc. Economy Minister Luis de Guindos said the government realizes investors are wary about the state of the Spanish economy.
"The government is absolutely aware of the environment, that there is an atmosphere of nervousness, that in addition it is made worse by the perception of a slow-down in Europe," he said. "The main source of nerves is the idea, which is more extensive every time, that we will have a recession in Europe this year and that it doesn't only affect the countries in the south. The indicators also show the countries in the north are starting to be affected.''
But de Guindos said Spain is committed to its austerity reforms and boosting the country's economic fortunes.
"The criticism that measures haven't been taken quickly is sincerely far from the truth. More can always be done," he said. "More can always be done and there the government is absolutely aware that it's very important to continue with its reformist agenda, that it be broad and that it increase the Spanish economy's growth potential.''
Some information for this report was provided by Reuters.