Public debt hits record high as Rajoy pressured to accept rival demands

SPAIN’S public debt has struck a record high of €1.1 trillion, equivalent to 100.9 per cent of GDP, the highest figure relative to national output in more than a century.

Figures from the Bank of Spain showed that the amount owed by the government rose by €18.5 billion in June alone, as the national debt continues its rampant escalation since 2008, when it was just 39.4 per cent of GDP. 

The Ministry of the Economy responded to the news by claiming it remains on track to meet its 2016 target of a debt to GDP ratio of 99.1 per cent, arguing that June’s eyebrow-raising data was accounted for by seasonal variations, and that the rate of debt increase has been slowing since 2013. 

The country remains hamstrung by parliamentary stalemate and is under increasing pressure from the European Commission to reduce public and private debt levels, but the economy is posting one of the EU’s fastest growth rates and bond yields recently fell ahead of an anticipated political breakthrough. 

Acting prime minister Mariano Rajoy and the Partido Popular (PP) are expected to accept a package of political reforms demanded by Ciudadanos in exchange for their support for a PP-led government. 

The centrist party, which emerged as a response to endemic political corruption, listed six demands that the PP must accept if it is to add Ciudadanos’ 32 seats to its own 137, forming a coalition just seven seats short of the 176 required for a parliamentary majority. 

Leader Albert Rivera has demanded that Rajoy set a firm date for his investiture vote; expel any party officials implicated in corruption investigations; change the electoral laws to establish a more proportionally representative voting system; end judicial privileges for elected officials and pardons in corruption cases; limit prime ministerial powers and create a commission to investigate the Barcenas case, which allegedly saw illegal cash payments made to PP officials.