Adds more than 12,600 million euros in one month and amounts to 116% of GDP, according to the Bank of Spain
The series of measures to deal with the crisis and the extraordinary expenditures that have caused the impact of inflation and runaway energy prices on households and businesses have pushed Spain’s public debt to new record highs.
Data released this Thursday by the Bank of Spain suggests that public service liabilities have risen from the €1,491 trillion recorded in August to €1,504 trillion, 116% of GDP, with a growth rate of 5% year-on-year .
The increase is 0.84% compared to the previous month. And there are already five successive advances. The data has grown by more than 12,600 million euros in just one month. And if the evolution of public debt over the last year (since September 2021) is taken as a reference, the difference is 71,715 million euros.
The scenario of a debt of 116% of GDP could be even worse if not for the inflationary environment we are currently experiencing. The key is in the GDP deflator and the differential from real growth. To understand with an example, it is not the same to produce 5,000 vehicles more from one quarter to the next than what those extra vehicles now cost due to the rise in prices. In other words, with the effect of inflation, nominal GDP is ‘inflated’ by the rise in prices, which has a positive effect on the final debt ratio.
In addition, the government is confident that the good development of the labor market, as well as the resistance of the foreign sector and the investments of the recovery plan, will enable the Spanish economy to close the year with a growth of 4.4%. A figure that would make it possible to reduce the debt ratio, although this does not mean that the debt level will fall in absolute terms.
According to the projections of the latest macroeconomic table included in the General State Budget (PGE), public debt will end the year at 115.2% of GDP before falling further to 112.4% in 2023, as well as pledged with Brussels. This implies that government services as a whole should reduce the ratio from current levels by 0.8 percentage points between now and the end of the year.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
