'fear of a bank freeze is palpable’

Should you want to see the real effects of the Spanish debt crisis, the Pluton Bar in Sant Pol de Mar, Catalonia, is a good place to start. Over morning coffees, customers discuss sovereign defaults, credit spreads and a possible euro exit.

There is certainly plenty to talk about – and complain about too. Local property taxes are set to rise by 15pc, on top of recent state income and capital gains tax increases. The national tax increase is supposed to be temporary, but no one believes rates will come down any time soon.

Banks also come in for a lot of stick. A local restaurant owner complained that her savings bank manager refused to let her take €30,000 out of her account. The money was needed to get the restaurant ready for the summer rush. New small print lets the bank block withdrawals, even on instant-access accounts. It took two weeks for the bank to relent. Apparently, it could block savings for two years if it wanted.

Changes to lletra petita (small print) are rife and rarely in customers’ favour. Banks and mutual lenders changed their terms and conditions when a new law to limit super dipòsits (high-interest accounts) came into force last year. Before the law took effect, big banks could afford to offer high rates. Weaker rivals saw money walk out of the door. The new small print might save them from a bank run, but fear of a corralito – a bank freeze – is palpable.

When Argentina defaulted on its debts in 2001, the government simply banned withdrawals over a certain size. Might Spain have to do the same to stop a bank run? That seems unlikely, but it hasn’t stopped me from making contingency plans.

I’ve stopped transferring money from the UK to my Spanish account on a monthly basis. Swiss friends are holding on to their beloved francs. “Little and often” transfers cost more, yet even a short-term corralito would kill our household finances.

At least we have money and I am earning in sterling. The weakened euro makes the Burgins feel marginally better off, a dead euro might not. A quick call to my mortgage bank shows just how unprepared the country is should Spain exit the euro or default on its debts. My mortgage is in euros and the interest rate pegged against the Euribor wholesale interest rate.

I ask what would happen if we went back to the peseta. Would my repayments rise or fall? The woman from Lloyds Bank International replies with another question: “Why are all the customers asking about this today?” Why indeed?

A promised call back with a sensible answer from the finance department fails to materialise. Instead, the Barcelona branch manager calls to tell me a default is highly unlikely. He also admits that he has no idea what would happen to the mortgage if Spain dropped out of the euro. I am not reassured.

Friends who, along with thousands of others, were sold a multi-currency mortgage in 2007 are actively considering handing back the keys to their home, even though their debts could haunt them for life. These loans were pegged to the Japanese yen, and banks promised zero interest rates and lower monthly payments. Since then, the euro has dropped by some 40pc and the cost of repaying such loans has risen by two thirds.