The Bank of Spain has released it´s latest figures for Spain’s national debt showing a record increase of just under 122.5 billion Euros in 2020.
The increase was due to the economic fall out from the coronavirus pandemic and the massive downturn in economic activity that followed.
The central government´s tax receipts fell as a result whilst at the same time unemployment and other social benefits rose as companies laid off workers or implemented the government´s furlough scheme ( ERTE) – the latter is due to end at the end of May.
The government´s total debt now stands at 1.311 trillion Euros which represents 117% of gross national product ( GNP).
The rise takes the ratio of national debt to levels not seen since 1902 when the then government was grappling with the twin issues of the end of the war against the United States and the global collapse in agricultural prices.
Whilst all European economies have seen sharp downturns due to the coronavirus impact, Spain´s economy has been particularly badly hit, recording the biggest fall in economic activity of all the major economies during 2020.
Spain´s largest sector – tourism – saw visitor numbers and visitor spending plummet during the year.
In addition both the government deficit and public debt, have been climbing over the last few years and the Socialist PSOE coalition government is committed to increased spending plans for the coming parliamentary session.
These trends will have a significant effect on the government´s room for fiscal manoeuvre especially as the servicing of the debt takes up an increasing proportion of public spending.
However the twin effects of the expected rebound in the economy as well as EU reocery package this year should offer some relief for the government´s fiscal planners.