Mariano Rajoy, Spain's prime minister, has called for centralised control of national budgets in the eurozone, in an unexpected gesture to mollify Brussels and Berlin.
Two months ago, Mr Rajoy defiantly set a unilateral 2012 budget deficit target for Spain of 5.8 per cent of gross domestic product, saying the decision was a matter of national sovereignty. But he soon backtracked and yielded to EU pressure to cut the target to 5.3 per cent.
Spain is eager to secure EU financing to recapitalise some of its struggling banks, but wants to avoid the sort of full-scale intervention that would bring harsh conditions imposed by Brussels and the International Monetary Fund and undermine the authority Mr Rajoy’s governing Popular party.
EU and German officials say even a bailout limited to the Spanish banking system would entail conditions and international oversight. “The decision lies with Spain alone”, said one German government insider.
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