Spain’s grinding economic misery will get worse this year despite the country’s request for a European financial lifeline of up to €100bn to save its banks, Prime Minister Mariano Rajoy said today.

Spain has raised €2.1bn from the bond markets – but at higher interest rates as investors remained concerned the country might still need external help to shore up its banking sector.

The board of directors of the troubled Spanish bank, Bankia, says it has agreed to ask for €19bn in state funds.

Hoping to put an end to a four-year banking crisis, the Spanish government effectively took over Bankia SA, one of the country’s biggest banks, after days of market anxiety over its viability.