Spanish public deficit worsens in September

28th October 2009, Comments 0 comments

The public deficit ballooned to 5.96 percent of gross domestic product or EUR 62.78 billion at the end of September.

Madrid – Spain's public deficit swelled to 5.96 percent of gross domestic product (GDP) in September as the government struggled to revive the recession-hit economy, the finance ministry said Tuesday.

The recession which has battered the country since 2008 and measures to revive the economy have hit Spain's public accounts hard.

In particular, soaring unemployment, which has now reached almost 18 percent, has seen spending on jobless benefits soar.

The deficit ballooned to EUR 62.78 billion at the end of September from EUR 13.51 billion at the same point last year, the finance ministry said in a statement.

At the end of August, the deficit stood at EUR 60.34 billion or 5.73 percent of GDP.

Spain ended 2008 with a public sector deficit of 3.8 percent, compared to a surplus of 2.2 percent in 2007, and the government has forecast it will soar to 9.5 percent by the end of the year.

Under EU rules, member states are supposed to keep their budget shortfalls to less than three percent of GDP although they are allowed some leeway when the economy sours.

The government last month approved a draft budget providing for tax hikes worth nearly EUR 11 billion and cuts in public spending to help rein in the deficit.

Formerly one of the eurozone's chief engines of economic growth and job creation, Spain suffered an abrupt change of fortunes last year when the global financial crisis hastened a correction that was already underway in its once-buoyant property sector.

The government expects the Spanish economy, Europe's fifth biggest, will contract by 3.6 percent in 2009 and only return to growth in the second half of next year.

AFP / Expatica

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