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.