The European economics chief Olli Rehn says the Union is ready to act if Spain needs a bailout.

It comes amid rising expectations that Spain will request financial aid with borrowing costs of the country set to escalate.

The Irish government will be closely watching any deal offered to Spain with the likelihood that a similar package will be offered to Ireland.

With the ratings agency Moody’s threatening to downgrade Spanish debt analysts believe it is only a matter of time before the country requests a bailout.

Today the European Economics Commissioner Olli Rehn said European powers are ready to act if Spain needs financial help.

However he said so far there is no request from Spain.

In the past week Spain has introduced a tough budget and revealed a lower-than-expected cost for bailout out its banks.

But if Spanish debt is downgraded to ‘Junk’ status the country will not be able to borrow and will need a bailout.

And it is the terms of the deal offered to Spain which will be of most interest here.

The Irish government is looking for any deal on Spanish bank debt to be applied here too.

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