EU authorities are working behind the scenes to pave the way for a new Spanish rescue programme and unlimited bond buying by the European Central Bank, by helping Madrid craft an economic reform programme that will be unveiled next week.
According to officials involved, talks between the Spanish government and the European Commission are focusing on measures that would be demanded by international lenders as part of a new rescue programme, ensuring that they are in place before a bailout is formally requested.
One senior European official said negotiations have been conducted directly with Luis de Guindos, the Spanish finance minister. The plan will focus on structural reforms to the Spanish economy long requested by Brussels, rather than new taxes and cuts.