Budget slashes fail to dampen growing public debt in Spain

LAST UPDATED: 17 Mar, 2014 @ 12:46
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Budget slashes fail to dampen growing public debt in Spain

SPAIN’S public debt soared to a record 94% of GDP in 2013 despite harsh budget-cutting measures.

Raised taxes, frozen public salaries and spending curbs on education and health failed to rein in bulging annual budget deficits and the fast-accumulating state debt.

The austerity drive sparked mass street protests.

Public debt rose to €960.6 billion at the end of 2013, the equivalent of 93.9 percent of gross domestic product for the year, the Bank of Spain said.

That was up sharply from 884.7 billion euros, or 86% of GDP in 2012.

In 2007, the year before a property crash plunged Spain’s economy into a five-year, double-dip recession that destroyed millions of jobs, Spanish public debt represented just 36.3 percent of gross domestic product.

The public debt for 2013 is still within the government’s forecast of 94.21% of GDP.

Spain’s government expects the public deficit to top 100 percent of GDP in 2015 before stabilising at about 101 percent in 2016; a figure well above the European Union-agreed ceiling of 60% of GDP.

7 COMMENTS

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  1. I wonder how much of this drain on reserves can attributed to unemployment. A fair bit I would guess….And still, against this horrendous state of affairs we have a regional government, (where the % unemployment is the highest in Spain), that seems to be doing absolutely nothing to settle the fears of some home owners where the legality of their property is in doubt (we all know (including the Junta) an amnesty would instantly solve this) and is doing nothing to cultivate a cohesive strategy in construction in order to stimulate the real estate sector. They seem oblivious to the vast (and rapidly expanding) pool of cash rich potential foreign buyers.

    I mean, how hard can it be??.

  2. brian, thank you, you may have noticed that I (and others) have been trying to make this point on various OP comments pages. To call the Junta de Andalucia brain dead and terminally stupid would be verging on kind. Economic recovery has to start somewhere and where better than the property market? They had a thriving residential tourism sector but they chose to kill it stone dead when they demolished the Priors’ house back in 2008. Not only do they still intend to go ahead and demolish more houses, they have instructed the town halls not grant permission for any extensions, garages, pools or building of any kind in the countryside. There is clearly a demand for it so why not allow it? Think of all the jobs it would create? They have failed their own people.

    The UK housing market is back on track now and there are many wealthy people who would like to buy property in Spain but will not do so while so called illegal properties are being demolitions and make no mistake about it, they are, it has not gone away. The Junta are effectively closing the door on an entire industry and for what? To please a few environmentalists? There is also the human cost in terms of the pain and misery caused to the thousands of people who are in danger of losing their homes. How can an inhumane regime such as this be allowed in a western democracy?

    Boot them out and have an immediate amnesty.

  3. The whole situation seems insane on the face of it. But could something more sinister than stupidity be at the root of this? The U.K. is not really enjoying a renaissance. Property in the south-east is becoming more expensive because there are simply not enough houses to go at. The rest of the country, in general, (apart from certain pockets) is still in the doldrums. So we have a situation where supply on the one hand – SOME of the UK, is short. On the other – Spain, there is, MOSTLY, over-supply. Perhaps, to ruthless minds, mass demolition would seem an attractive option, in order to drive up desirability of what is left. Let’s face it, everybody, except the victims and the general population, has already had a good screw out of it all.

  4. Stefanjo: if what you are saying has any truth in it and those depths of depravity have in fact been reached then it is pretty obscene really isn’t it? That said, the mad *** would have no difficulty in stooping that low.

    The property over supply mainly consists of endless rows of tower blocks in a concrete jungle not the attractive, detached, rural properties mostly bought by foreigners. These “left over” properties are hardly any substitute for the properties that are being demolished.

    I take your point about the UK housing market but you would have your work cut out to find anywhere in the UK with a worse property market, economy or unemployment figures than Spain.

  5. @Jane….I can’t disagree with what you say…In spite of Stefanjo’s comments, rather than anything sinister I truly believe they haven’t got the foggiest notion of what to do….We have politicians on the top table in Sevilla who have no commercial experience whatsoever and think that, by following Rajoy’s ‘the future is bright’ verbosity, they can just muddle through the next couple of years, and all will be hunk dory. And if it isn’t they can blame the P.P.’s restraints

    Clegg’s lunatic idea of an ex-pat MP would serve only to feed the already festering intransigence of those who can’t (or won’t) see beyond the box in which they are historically hiding.

    I’m not normally pessimistic but I can’t see the situation (neither in employment or real estate) improving anytime soon. And as we all know, the more people shout the more our Iberian hosts dig their heels in and indulge in galloping prevarication.

  6. brian, you make a very good point regarding the Junta de Andalucia’s possible intention to blame PP if all else fails. They have already used the trip wire technique in terms of allowing so called illegal building on a massive scale, taking all the revenue for over 10 years, pretending to know nothing about it and then suddenly declaring everything “illegal” and blaming the town halls.

    Perhaps they want to stiffle growth as much as possible, keep umemployment sky high and then blame in on the “cuts” imposed by PP. In order to pull it off, they would have to bank on the electorate being as stupid as they are which is very hard to imagine.

    If this is the best they can come up with then I will have to say it again, they are not fit for purpose and need to be kicked out before they inflict more damage.

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