Spanish workers protest labour reforms

Simon Tilford, chief economist at the CER in London, said austerity measures in Spain, like elsewhere, will not solve its economic problems. "What's worrying about what we are seeing is that very little seems to have been learned from what happened in Greece and Ireland and Portugal," he said. "They are applying the same strategy to Spain. Now the big risk for the eurozone is that Spain is twice as big as those three economies combined. So if Spain gets into similar difficulties, it won't just be a tragedy for the Spanish people, but it will also pose an existential threat to the euro."

According to Tilford, austerity only serves to shrink rather than grow euro economies. The European Union, he said, needs a closer degree of integration with a federal budget that would enable resources to flow easily among euro countries, what he calls the only feasible - yet unlikely - resolution.

"The political will to do what is necessary to stabilize the situation within the eurozone is really just not there," he said. Now that's not to say that we will not see big institutional changes going forward - it's possible that we will. But it's just as likely that the ongoing crisis will undermine solidarity between countries and that that could actually militate against the changes that are needed to put the single currency on a more sustainable currency."