Eurozone update: Spain to receive euro bailout

Eurozone ministers have agreed to lend Spain up to 100 billion euros (£80 billion) to support its struggling banks.

The US and the International Monetary Fund (IMF) have welcomed the move which was agreed in emergency talks held between Eurozone ministers over the weekend. The exact bailout amount is to be confirmed following an independent assessment of the country's finances carried out in the next two weeks.

Speaking to the press after the decision, Spanish Prime Minister Mariano Rajoy said: "The credibility of the euro won, the future of the euro won, the European Union won and the chances that Spain can soon recover a level of lending that will improve investment and job creation also won."

Spanish banks have suffered badly after borrowing large amounts of money for property loans. The subsequent collapse of the property boom and the county's recession has meant that billions of euros worth of loans could not be repaid.

Spain is in the midst of its second recession in three years, with its economy expected to shrink by a further 1.7 per cent this year and unemployment currently affecting one in four of the population.

Spain is the fourth and largest country within the Eurozone to receive help with a debt crisis, following the second bailout of Greece in March 2012, Portugal in May 2011, and the Republic of Ireland in November 2010.

Although Britain remains outside the Eurozone and will not contribute to Spain's bailout, ongoing uncertainty surrounding the euro was feared to unsettle global financial markets.

However, the deal seems to have quelled concerns with shares in London and European markets seeing the strength of the euro move to a three week high this morning. Economists have warned that eurozone fears may have only eased for the short-term.

Eyes are now on Greece and its national election on 17 June which could determine whether the country is to leave the euro. If the country choses to reject strict austerity measures as laid out in its bailout deals then it could face a possible exit, leading to anxiety from investors around the world.