The cost of borrowing for the Spanish government hit a record high on Thursday, as confidence in Spain's ability to repay its debts fell.
The interest rate Spain is being asked to pay by investors is now 2.23 percentage points higher than that being demanded of Germany.
The BBC reports the government admitted this week that foreign banks were refusing to lend to some Spanish banks.
Spain has been forced to deny reports that it is in talks with the IMF over a bail-out package to help it manage its debts.
Budget cuts and unpopular labour reforms have been announced to avoid a Greek-style meltdown.
The budget deficit is currently more than 11% of GDP - well above a limit of 3% imposed by the EU. The unemployment rate is 20% - the highest in the eurozone.
