June 13 - After Spain's bank bailout failed to calm markets, Italy's Prime Minister Mario Monti has called for political unity and a plan for growth to protect Rome from contagion. Joanna Partridge reports.
Days after seeking help for his country's struggling banks - Spanish Prime Minister Mariano Rajoy has insisted they will have to pay back the loan. Rajoy has come under fire for choosing to rescue banks while bringing in deep austerity measures. He says he'll discuss greater fiscal and banking integration when he meets the leaders of France, Germany and Italy next week. That chimes in with comments European Commission President Jose Manuel Barroso made to the European Parliament. SOUNDBITE: EUROPEAN COMMISSION PRESIDENT, JOSE MANUEL BARROSO, SAYING (English): "A deeper economic and monetary union requires deeper accountability and legitimacy. Making the technical proposals is ironically the easier part. But if the technical proposals are made without proper support all across the European Union, we risk a backlash." Barroso called for euro zone countries to respond with more urgency to the two-and-a-half-year-old crisis. Italy's become the latest country to fall under the market spotlight. Its high borrowing costs have sparked debate whether it's next in line to ask for financial help. Prime Minister Mario Monti told parliament his government is not about to ask for any kind of bailout. But he is calling on European leaders to come up with a credible plan for growth by the end of the month. SOUNDBITE: ITALIAN PRIME MINISTER MARIO MONTI, SAYING (Italian): "If measures are instigated to allow growth, then the financial markets will see that the finances in Italy are sustainable, we will pay a lower spread, taxes will lower and businesses will have an easier time rather than be penalised with their investments and this will protect us from contagion." Peter Westaway from Vanguard says while Italy's banking sector isn't a cause for concern, its debt is. SOUNDBITE: Peter Westaway, Chief Economist, Vanguard, saying (English): "As soon as their interest rates start to creep up, it inevitably raises questions about their solvency. Italy, like Spain, has now started to put in place austerity measures and structural reforms which will hopefully get them on the right track, but without doubt the market is still worrying about Italy, for sure." Time is of the essence for European leaders to act in this fast-moving crisis. A slim majority of economists polled by Reuters say they believe Spain will soon follow Greece, Portugal and Ireland in seeking a sovereign bailout, on top of the rescue for its banks. Joanna Partridge, Reuters