Eurozone governments moved to quell fears of renewed crisis on Friday, with finance ministers raising the so-called firewall to back countries that get into financial difficulties as Spain moved more aggressively than expected to cut its fiscal deficit.

Introducing the most swingeing cuts of the post-Franco era,Madrid announced a series of measures to cut the country’s deficit by €27.3bn this year, including slashing government spending by 16.9 per cent, raising corporation tax and freezing public sector pay.

Underlining a collective will to corral the inflagration that had forced Greece into a technical default earlier this year, the Spanish budget minister Cristóbal Montoro said “extraordinary measures” would have to be taken, because Spain’s fiscal situation was “critical”.