Spain | The pain of paying

Summary

If there were a meter in our homes telling us how much our tax burden (or that of our children) would have to increase each day to pay off the growing public debt, it's likely that we would have a greater sense of urgency regarding the need to take measures to lighten the burden.

Key points

• Key points:
• Public debt in Spain reached 117% of GDP in 2020, and it is likely to grow beyond 120% of GDP this year.
• With the Temporary Redundancy Plan (ERTE) having been extended, and with measures likely to be implemented in the coming months to continue supporting businesses and families, it is looking like the imbalance in public accounts will reach levels similar to those expected in 2020 (11.5% of GDP).
• Yet despite this, the increase in public debt has been necessary. The health system had to be strengthened and businesses and families needed to be protected.
• However, it is also true that sooner or later we will have to demonstrate that, with interest rates at more normal levels, we can meet our obligations.
• Reducing debt does not have to be painful: successful deleveraging processes rely on increased growth capacity. Using funds from the Next Generation EU program, Spain has an unprecedented opportunity to reform its economy.

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