By John Smith • 01 October 2020 • 16:04
ACCORDING to figures released by the Bank of Spain, the public debt soared to €1.29 trillion in the second quarter of 2020 which is its highest level for 20 years, due to its efforts to cope with the results of the pandemic.
Although this is a huge amount, it compares favourably with the United Kingdom debt which reached £2 trillion (€2.2 trillion) at the end of June and like Spain still continues to increase on a monthly basis.
Normal rules no longer apply and whilst the European Union set targets for all member states requiring that public debt should be no higher than 60 per cent of Gross Domestic Product (GDP) this is simply unrealistic at the present time.
The reality is that whilst it stood at 99 per cent in the first quarter, it rose to 110 per cent as Spain was in lockdown for much of the second quarter and was trying to assist those in financial need whilst reeling from the loss of important tourist and export business.
Taking a pragmatic approach, the Government has decided (like Britain and some other countries) to suspend the budget and try to cope with matters as they occur whilst maintaining what Finance Minister, María Jesús Montero called a “fiscally responsible” approach when announcing this at a press conference.
One piece of good news is that analysts forecast that GDP which had fallen dramatically in the first six months of the year looks likely to start to bounce back, provided that the sudden spike in Covid-19 illness is short lived.
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Married to Ophelia in Gibraltar in 1978, John has spent much of his life travelling on security print and minting business and visited every continent except Antarctica.
Having retired several years ago, the couple moved to their house in Estepona and John became a regular news writer for the EWN Media Group taking particular interest in Finance, Gibraltar and Costa del Sol Social Scene.
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It´s not coronavirus that has caused the financial problems, it is the disproportionate response by the government in shutting the country down for months that has caused the problem. If it had been treated like any other flu season none of this would have happened and we wouldnt now be living in stasiville
It’s only Fiat Currency. Central Banks can keep printing as long as government can spend it. Of course it loses all of it’s value over time. What ever the government debt is, the people are the ones that ultimately have to pay it back.
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