Spain’s contagious collapse

The EU faces its biggest challenge to date: Containing Spain's economic woes

Spanish flu spread around the world in the early 1900s. The pandemic didn’t begin in Spain, but it was there that the world realized how serious — and unstoppable — the outbreak had become.

Now, as Spain takes up a central position in Europe’s economic crisis, the analogy is clear.

Sickly economies in Greece, Portugal and Ireland may yet respond to the European Union’s limited array of economic remedies.

But if Spain’s attempt to heal itself with a shock-treatment of austerity fails, the EU may not be strong enough to prevent the infection from spreading to Italy, France and beyond.

“The big question is, can Europe ring-fence Spain, can they draw a line to stop this contagion happening? This is their biggest challenge,” says Carsten Brzeski, senior Brussels economist at the Dutch bank ING.