By Max Clarke

As EU ministers prepare to meet in the morning to discuss Spain’s spiraling debt problem, the country’s coming under scrutiny following the Irish Republic aid package of 85bn euros (£72bn; $113bn) last month. With German Chancellor Angela Merkel insisting that no country in Europe would be "abandoned", the euro is being defended. But Madrid denies similarities between the two economies, distancing themselves from the Irish crisis.

The meeting in Brussels on Thursday and Friday will address the region's debt crisis and how it can tackle it. These included plans to partially restructure debts of Greece, the Irish Republic and Portugal, guaranteeing the bonds of stable countries and a limited introduction of pan-European bonds.

Mark O’Sullivan, Director of Dealing at Currencies Direct comments,

“As we enter the last few trading days of the year the lack of liquidity is once again causing problems for the Euro, another threat of a downgrade for Spain has not helped the situation. It’s highly unlikely traders will want to put on any further positions over the festive period and this will only put more pressure on the Euro. Any talk by politicians will only be seen as window dressing with the once again increasing yields on Spanish and Portuguese debt, laying the foundations for a very difficult 2011 for the single currency.”