Spanish unions and bosses fail to agree reform package

The failure of the 11-hour negotiations mean the government will now propose its own plan for changing the rules that govern Spain's labour market.

The negotiations were aimed at creating consensus on reforms to encourage companies to hire, resurrect an economy saddled with a 20 per cent unemployment rate and reassure markets that Spain can trim its heavy deficit and debt loads.

Spain's borrowing costs rose dramatically as the Treasury auctioned 3.903 billion (3.226 billion) in three-year bonds at an interest rate of 3.394 per cent. That marked an increase of 1.36 percentage points since the last auction on 8 April.