Spain must learn from Irish crisis

Irish economists have advised Spanish authorities awaiting the results of stress tests on their banking system to “imagine the worst and double it”.

Like Ireland, Spain sought a bank bailout after being felled by a real-estate crash. Now, just as the Irish did, the Spanish are awaiting the results of outside stress tests gauging the size of the hole in the banking system.

Eoin Fahy, an economist at Kleinwort Benson Investors in Dublin, said: “Think of the worst possible scenario on banking losses: then double it. Adopt the most conservative assumptions.”