A panicky Spanish government issued dramatic messages of impending doom for the eurozone on Thursday as its borrowing costs reached unsustainable levels and foreign minister José Manuel García-Margallo claimed that the EU may need to act within hours.

"The future of the European Union will be played out in the next few days, perhaps in the coming hours," he said, according to Spanish press reports.

The foreign minister, who was speaking as Spain's long-term borrowing costs hit an unsustainable 7%, warned that other European countries would suffer dreadfully if they let Spain fall. ''If the Titanic sinks, it takes everyone with it, even those travelling in first class,'' he said, in a warning clearly aimed at Germany and other eurozone countries.

The interest rate on the country's benchmark 10-year bonds briefly hit 7% on Thursday, its highest level since the country joined the euro in 1999, after the ratings agency Moody's downgraded Spain's sovereign debt to just one grade above ''junk" status.

Moody's said the downgrade was due to the offer from eurozone leaders of up to €100bn (£81bn) to Spain to prop up its failing banking sector adding considerably to the government's debt burden.

García-Margallo's comments contrasted with those of finance minister Luis de Guindos, who called for calm during an inevitably volatile period while Europe prepares to make key decisions on its future and waits to see how Greece votes on Sunday.

"It is not a situation that can be maintained over time … and I am convinced that we will continue to take more measures in the coming days and weeks to help bring it down," De Guindos told reporters, referring to Spain's borrowing costs, after senior cabinet members had met prime minister Mariano Rajoy.

Government sources said that the EU president Herman von Rompuy was set to meet Rajoy, Germany's Angela Merkel, Italy's Mario Monti and Frrance's François Hollande in a five-way meeting during the G20 meeting in Mexico on Monday.

Barack Obama, who has been pressuring eurozone countries to act quickly in order to sort out the debt crisis, was also expected to meet the five leaders in Mexico. David Cameron may also join the meeting.

The EU competition commissioner, Joaquín Almunia, was expected to get a chilly reception in Madrid on Friday when he flies in to meet Rajoy to discuss the bailout of the country's banks.

Rajoy's conservative People's party (PP) has called for Almunia, a Spanish socialist, to resign after he warned that some Spanish banks may have to be liquidated.

"Rajoy is head of the People's party but, most importantly, he is the prime minister and in that role he will not be asking for Almunia's resignation," a government source said.

Almunia will be in charge of the EU inspectors who oversee the restructuring of the Spanish banking sector. The budget minister Cristóbal Montoro has called them the "men in black".

Spain will next week be able to say how much of the €100bn its banks really need. Rajoy has said he will wait for the results of two independent valuations of Spanish bank assets before deciding on a final sum.

Those reports are due by 21 June, but Reuters reported that officials in Madrid already knew the contents of the reports and that Rajoy would have the figures with him when he travelled to Mexico.

The final figure was likely to be between €60bn and €70bn, according to Reuters, though officials in Madrid refused to confirm the amount.

Officials said that Spain wanted the banking loans to be delivered as soon as possible. ""No one is more interested than us in there being absolute clarity in our banking sector, and as soon as possible," a government source said.

Madrid is pinning its hopes of avoiding a wider bailout of the country on an EU summit to be held at the end of this month.

"The government is seeking a declaration of the irreversibility of the single currency and of its willingness both to defend that and to create the necessary mechanisms," a government source said.