Debt crisis: live

09.36 With the rain dampening shoppers' spirits - and their appetite for barbecue food - British retail sales grew much less than expected in June. The Office for National Statistics said retail sales volumes rose by just 0.1pc on the month to give an annual rise of 1.6pc - well below economists' forecasts for monthly and annual rises of 0.6pc and 2.4pc respectively.

For the second quarter as a whole - one of the wettest in decades - retail sales volumes fell by 0.7pc, the sharpest fall since the first quarter of 2010

09.32 Here's an interesting take on the debt crisis from the BBC, which explores the "eurozone's religious faultline". Chris Bowlby of BBC Radio 4 points out that the German word for debt - schuld - is the same as the word for "guilt" or "sin" and he writes:

Discussion among eurozone leaders about the future of their single currency has become an increasingly divisive affair. On the surface, religion has nothing to do with it - but could Protestant and Catholic leaders have deep-seated instincts that lead them to pull the eurozone in different directions, until it breaks?

Following the last European summit in Brussels there was much talk of defeat for Chancellor Merkel by what was described as a "new Latin Alliance" of Italy and Spain backed by France.

Many Germans protested that too much had been conceded by their government - and it might not be too far-fetched to see this as just the latest Protestant criticism of the Latin approach to matters monetary, which has deep roots in German culture, shaped by religious belief.

09.19 Germany's parliament is interrupting its summer break to vote today on the rescue package for Spain's banks that could be worth up to €100bn.

Angela Merkel is optimistic of securing a broad majority for the aid deal, although bailing out eurozone nations is not popular in prosperous Germany.

Officials argue, however, that stabilising Spain's banking sector is in the country's own interests. Steffen Kampeter, a deputy finance minister, said:

We tried once, with Lehman Brothers, letting a system-relevant financial institute go bust - the result was the economy shrinking in Germany.

He added that helping Spain's banks is "above all in the interest of Europe's financial market stability and so also in the interest of jobs in Germany".

08.45 Also in Spain today, the country's parliament is set to ratify the €65bn budget cuts announced by prime minister Mariano Rajoy last week. Yesterday, Mr Rajoy pledged to forge ahead with the austerity measures, saying:

This government cannot choose between good and bad options, but between bad and worse, which is what we are doing. "If we maintain this common-sense policy, Spain will emerge from the crisis.

But, he is facing mounting opposition to his austerity programme, with Spain's two leading unions, Comisiones Obreras and the General Workers' Union (UGT) calling for a mass rally in Madrid today.

The two unions said they planned more than 80 demonstrations by public sector workers across the country this evening, with the flagship Madrid march due to start around 18.30.

08.28 Spain will test investors' appetite for its debt today, with the country planning to sell as much as €3bn of debt. Even though the country unveiled a raft of austerity measures last week, analysts expect borrowing costs to remain high as Spain carries out three issues of two- to seven-year debt.

RBS interest rate strategist Harvinder Sian said:

The reforms announced are in the right direction, but [yield] levels will remain high as it's a question of whether they are sufficient and where Spain is going to see any growth.

Spain's 10-year bond yields are currently hovering around the 6.86pc mark.

08.20 German chancellor Angela Merkel faces a test of authority within her coalition today when the lower house of Germany's parliament votes on Berlin's contribution to an aid package for Spain's banks that could total €100bn.

While the Bundestag is expected to approve the resuce as members of opposition parties will back the measures, Mrs Merkel is fighting dissent among from some of her own coalition partners over fears that Spanish banks, rather than the Spanish state, may become liable for the aid.

But finance minister, Wolfgang Schaeuble, told the Rheinische Post daily yesterday:

The impression that has arisen through unclear and irresponsible comments from some individuals that we are now deciding on direct aid to banks without state liability is simply absurd. It is completely unfounded.

08.10 Yesterday, we had a stark warning from the International Monetary Fund on the state of the eurozone. It warned that it was in a "critical" condition and urged the European Central Bank to tackle the crisis by turning on the printing presses:

The ECB can provide further defences against an escalation of the crisis. These could include policies to support demand in the short run and fend off downside risks to inflation, as well as measures to ensure monetary transmission, currently impaired by financial stress in some countries.

And to further strengthen its financial markets role, the ECB could also be given explicit responsibility for financial stability and full lender-of-last-resort functions, thereby eliminating bank-sovereign linkages present in the current Emergency Liquidity Assistance scheme.

08.05 Good morning and welcome back to our live coverage of the European debt crisis.

Debt crisis live: archive