Spain public debt hits record high in second quarter: Bank of Spain

MADRID (AFP) -Spain’s accumulated public debt soared to a record high at the end of June, the Bank of Spain said on Friday, shattering government targets despite a relentless austerity squeeze.

Spain, which boasts the euro zone’s fourth-largest economy, had racked up an unprecedented public debt of 942.8 billion euros (S$1.6 trillion) by mid year, the bank said.

The figure was equal to 92.2 per cent of the nation’s total annual economic output – up 14.7 percentage points from the same period last year.

With just half of the year gone, Spain had already missed its target of limiting the public debt to 91.4 per cent of gross domestic product in 2013, the figures showed.

Prime Minister Mariano Rajoy’s conservative government is battling to rein in the soaring public debt by curbing spending.

The ensuing budget cuts have sparked angry street protests as Spaniards endure a two-year recession which pushed the unemployment rate to 26.26 per cent in the second quarter of this year.

High unemployment leads to lower tax income and bigger social security bills for the state, making it even harder to plug the hole in Spain’s public accounts.

Mr Rajoy’s Popular Party government says it is determined to pursue austerity measures to help the country save 150 billion euros between 2012 and 2014.

it aims to curb the annual public deficit from 7 per cent of economic output last year to 6.5 per cent in 2013, on the way to finally bringing it below the European Union-agreed ceiling of 3 per cent by 2016.

The Bank of Spain also revised up the first-quarter figures to show the public debt amounted to 90.1 per cent of gross domestic product rather than 88.2 per cent, in line with recent downward revisions of Spain’s economic growth.