Mr Rajoy’s government is hanging by a thread. He needs Basque support in order to pass the budget. The bill has already been delayed. The Basque leader Inigo Urkulu has since said the Catalan crackdown “dynamites the bridges” and may spell the end of any cooperation. The Basque mood is highly defiant. Its police force has backed Catalan comrades in the Mossos d’Esquadra, denouncing the arrest of the Catalan police leader for sedition as an unjustified abuse of state power. “You are not alone,” they wrote in an open letter. The great unknown is what will happen if Spain’s Guardia Civil tries to remove Catalonia’s leaders by force. The hard-Left CUP party in Barcelona has called for massive resistance, describing the events of recent days as the worst abuse of civil liberties since the Franco dictatorship. Spain has been the poster-child of eurozone austerity policies, the one country in southern Europe that pulled off an “internal devaluation” and clawed back competitiveness by squeezing wages. Yet output has only just regained its former level a decade later. Unemployment is still 17.1pc. The country has no cushion against another global downturn. Public debt has jumped to 99pc of GDP. The International Monetary Fund warns that external net debt is still 90pc of GDP, leaving the country highly vulnerable if anything goes wrong.
Fears are on the rise that countries may need another financial bailout from the European crisis , as the country 's escalating constitutional crisis threatens the nation 's fragile transition to economic recovery . inflation has cushion to protect it from another downturn , and with public debt surging to 99 % of GDP , the IMF warns the country is highly vulnerable to any economic shift . The Spanish crisis has also highlighted the weakness of the European institution order , leaving Brussels unable to respond to a situation that appears to have taken on an unstoppable momentum .