Public Debt in Spain
Spain - Public Debt
President Rajoy announces new fiscal reform
On 20 June, the administration of President Mariano Rajoy unveiled a fiscal reform in a bid to prop up economic growth. The measures include cutting the corporate tax from the current 30.0% to 28.0% in 2015 and to 25.0% in 2016; a cut to the income tax and a reduction in the number of income tax brackets, among others. The government also approved new measures to broaden the tax base, such as reducing tax breaks. That said, the government dismissed the possibility of increasing the value-added tax (VAT) rate. Finance Minister Cristobal Montoro stated that the recovery is strong enough that lower taxes will not dampen tax revenue.
While the government claimed that these measures will provide additional support to the country’s incipient recovery, some analysts pointed out that the government’s true aim is to strengthen its position ahead of the general and local elections that are scheduled for 2015.
The European Commission was surprised by the government’s announcement. On 20 June, Commissioner for Economic and Monetary Affairs Olli Rehn said that, although the European Commission (EC) was “generally” aware of the Spanish government’s plan, “I cannot say that we have been consulted to detail.” In addition, senior officials from the European Commission noted that the Spanish government has ignored some of the EC’s recommendations, such as increasing the VAT tax. The same source also expressed that these measures could pose additional risks to Spain’s fiscal consolidation.
The government set a deficit target of 5.5% of GDP for this year and of 4.2% of GDP for 2015, before returning to below the 3.0% threshold set by the European Commission in 2013.
FocusEconomics panelists expect that the government will reach the new target this year, with a projected 5.3% of GDP shortfall. In 2015, panelists see the fiscal deficit narrowing to 4.3% of GDP.
Spain - Public Debt Data
|Public Debt (% of GDP)||95.5||100||99.3||99.0||98.1|
5 years of economic forecasts for more than 30 economic indicators.
|Bond Yield||0.41||5.62 %||Jul 10|
|Exchange Rate||1.13||0.65 %||Jul 11|
|Stock Market||9,280||-0.74 %||Jul 11|
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July 5, 2019
Industrial production rose 1.4% year-on-year in seasonally- and calendar-adjusted terms in May, moderating from April’s 1.8% increase.
July 3, 2019
Reflecting diverging performances in the manufacturing and services sectors, the IHS Markit composite Purchasing Managers’ Index (PMI) remained at May’s five-and-a-half year low of 52.1 in June.
June 28, 2019
Spain’s current account balance recorded a deficit of EUR 413 million in April, smaller than the EUR 1.3 billion shortfall recorded in April 2018 but much greater than the EUR 107 million deficit logged in March.
June 28, 2019
Retail sales rose 3.1% in year-on-year terms in May, marking a seven-month high and following the softer 1.9% upturn logged in April.
June 28, 2019
Economic activity accelerated at the start of the year, according to a second GDP estimate released by Spain’s Statistical Institute (INE) on 28 June.