Rajoy's [budget deficit target reduction] victory served as a warning flare to markets, but it delighted Spaniards. But on Thursday it counted for nothing: as the new regime prepared to unveil its first Budget on Friday, Spain was brought to it knees by protests. The demonstrations rattled the markets and pushed Spain's shares down and borrowing costs up.

Citigroup's Willem Buiter said he expected Spain to "be pushed into a troika programme of some kind during 2012", either because it gets shut out of the bond markets or its banks fail.

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