Neither Italy nor Spain will need to be bailed out, but both eurozone economic giants need to strictly implement planned reforms, EU Economic Affairs Commissioner Olli Rehn said on Friday.
"I do not believe either of these countries will need a program," Rehn said as he sought to soothe market concerns that the third- and fourth-largest economies in the 17-nation eurozone could follow in the footsteps of smaller beleaguered euro nations Greece, Ireland and Portugal.
Italy and Spain have faced record borrowing costs on markets this week amid fears that the pair could be next in line for trouble as Europe's debt crisis spreads from weaker peripheral countries.
The market unrest seen in the last few days was unjustified "on the grounds of economic fundamentals," Rehn said.
"It is not justified for Italy. It is not justified for Spain."
Rehn said the drama on the markets was simply "incomprehensible," given there had been no major changes in the economies of either nation and that both had committed to ambitious reforms for "fiscal consolidation [and] ... to put their economies back on track."
But in the case of Italy, approval and implementation of a welfare reform plan currently before parliament "should be accelerated" while further labor market reforms and the opening of closed professions "should be prioritized," Rehn said.
Turning to Spain, Rehn welcomed its "bold reforms" while saying that, as for Italy, "forceful implementation is paramount."
Madrid needs to complete moves to strengthen its banking sector and ensure that fiscal consolidation was strictly implemented at the regional level, he said.
Copyright Agence France-Presse, 2011