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Madrid this week called for a significant ratcheting up of federalisation of the blocs core economies, saying further amalgamation is the only way to save the troubled euro currency.

Prime minister Mariano Rajoy openly called for radical solutions in an address yesterday and vowed to put pressure on France, Germany and Italy to press ahead with completing the eurozone.

The Spanish leader is likely to find a close ally in French president Emmanuel Macron, who has also called for further federalisation, but could face resistance from Germany chancellor Angela Merkel.

Berlin is extremely reluctant to enter into any reform which will involve the pooling of sovereign debt, because it would effectively require German taxpayers to underwrite the entire eurozone economy.

Italian ministers may favour such a scheme given the dire state of their financial institutions, but a further ceding of sovereignty could be dangerous at a time when eurosceptic feeling in the country is running high.

Speaking on Monday, Mr Rajoy openly advocated the creation of a eurozone budget, EU finance minister and the establishing of eurobonds which would have to be underwritten by Germany.

The Spanish PM announced he would press the big three of France, Germany and Italy on the issue at a special eurozone summit on August 28, saying: We are going to continue to work to deepen economic and monetary union.

We are going to continue to work to deepen economic and monetary union

Mariano Rajoy

He urged: Spain is backing a European finance minister and a European budget which will progressively bring closer together living standards and the wealth of all European countries.

In a move likely to unnerve Germany, which is opposed to the pooling of eurozone debt, he added: Spain is going to bet on the existence of eurobonds, a European treasury emitting eurobonds.

His intervention comes after the Spanish finance minister Luis de Guindos also urged ambitious reform of the eurozone, including the creation of a European monetary fund and EU control over a certain percentage of national budgets.

Mr Macron has also put reform of the eurozone and single currency, which has overwhelmingly benefitted Germany at the expense of other member states, at the heart of his policy agenda.

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And the enigmatic centrist appears to have won some concessions from Berlin - historically opposed to upsetting the status quo - amid concerns dissatisfaction with the euro is fuelling anti-EU feeling.

Last month Mr Macron said: I have never reproached Germany for being competitivebut a part of German competitiveness is due to the dysfunctionalities of the eurozone, and the weakness of other economies.

However, any such reform risks further heightening eurosceptic sentiment as it would automatically involved a further ceding of sovereignty over fundamental tax and spending powers.

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