New’s of Spain’s record high debt has emerged, despite the nation’s government’s attempts to cut spending, the Central Bank has reported that Spain’s debt now stands at 942.8bn euro’s ($1.3 Trillion) which is the equivalent of 92.2% of the country’s entire economic output.
Despite the government’s severe spending cuts this is nearly 15% higher than a year ago. Drastic Austerity measures that have led to massive street protest, have drove the unemployment rate to a record 26%. Prime Minister Rajoy’s government is attempting to reduce spending by 150 bn euro’s between 2012-14. The Central Bank, fears that debt could top 100% within the next three years, as the government attempts to revive a failing economy.
Prime Minister Rajoy may deserve some credit however as figures show that the country’s debt-laden banks have successfully reduced their borrowing from the ECB. Spanish banks borrowed 243.9bn euros from the ECB, in August, making it the 12th successive month their borrowing has fallen.
In August 2012, the banks borrowed a record amount of 411bn euros from the ECB, reflecting the total lack of investor confidence in the nations banking sector. The banks also received 41bn euros of EU bail-out finding in 2012.