It has not escaped the attention of many economists that the deepest impact of the Covid-19 outbreak in Europe is falling upon already debt-riddled Mediterranean countries.

Soaring infection and mortality rates in Italy, Spain and France have led to stringent lockdowns, which were implemented comparatively sooner than in Eurozone counterparts.

The strident steps taken to contain the spread of infection will inevitably lead to painful recession and contribute eye-wateringly to already sizeable budget deficits. In Spain, and Italy, where a significant proportion of GDP lies in the casual economy, most notably the hospitality sector, the impact on populations will be gruelling. In the UK the £350 billion lifeline announced by the Chancellor will see the country borrow at levels never-before witnessed in peacetime. But for Italy and Spain, such borrowing is simply unimaginable.

Naturally, prospective lending to fiscally unsound economies leads to the imposition of higher interest rates, creating prolonged economic crises, if borrowing can be undertaken at all. At the end of last year, Italian debt was already 136.2% of the country’s GDP, with France and Spain clocking up similarly wince-inducing ratios of 98.1% and 97.5% respectively.

Despite sharing the same currency, other members of the Eurozone are not forced to borrow at the same rates. Markets anticipate solvability and liquidity and attach conversion risks on the premise of each country having a domestic currency. The premium risk currently sits at -0.4% for Germany based on borrowing for 10 years, but for France teeters around 0.5%, Spain 0.7% and Italy, an unsightly 1.5%.