The bill of the coronavirus crisis: the debt increases 450 million a day

Public debt continues to rebound at a dizzying rate as a direct consequence of the coronavirus crisis and the measures that the Government has deployed to cope with the economic recession. So much so that the set of liabilities of the Public Administrations closed August at 1.29 trillion and has already rebounded to more than 100 billion in the first eight months of the year. Or even more clearly: debt grows at a rate of 450 million euros per day.

This is evidenced by the data published yesterday by the Bank of Spain, and which also shows that in the aforementioned month of August the debt grew by 7,537 million. A remarkable figure, no doubt, but that pales with those registered in March, May and, especially, June: in that month alone, liabilities soared by more than 32,000 million, which means that a growth rate of more than 1,000 million a day.

Those were the months in which the greatest effort was made by the Administration and, in particular, by the State, which is the area that has centralized the weight of the measures deployed to fight the crisis and that already has a debt higher than the 1.1 trillion. However, actions such as the temporary employment regulation files (ERTE) and the situation of the labor market itself have also led to a notable increase in employment. Social Security debt: the system as a whole already owes 72,000 million, which is, as in the previous cases, the highest figure in history.

The Government’s estimate is that the debt will reach 118% of the Gross Domestic Product (GDP) at the end of the year, although it seems likely that this estimate will fall short. BBVA Research, in its report Spain situation, estimated last Wednesday that the figure will be 120% and if one takes into account that its forecast of nominal GDP is 1.107 trillion, the result is the one that passive will easily exceed 1.3 trillion.

In all these dizzying figures, however, there is another very relevant factor that goes beyond the crisis situation: the inability that Spain has exhibited in recent years to control its deficit and debt. The government of Josà © Luis RodrÃguez Zapatero managed to reduce the liability to 35% of GDP and keep it below 400,000 million. But after the outbreak of the previous crisis, that same Executive began to unleash increases that, as in the present year, came to exceed 100,000 million annually.

The Mariano Rajoy government did not correct this situation either, and in the boom years there were only reductions in relative but not absolute terms, that is, the debt / GDP ratio only fell due to the growth of the economy itself. This has been shown on more than one occasion by the Bank of Spain, which has also pointed out that the Executive of Pedro Sánchez has done exactly the same. What’s more, Spain reached the crisis with less space and capacity to act because in 2019 the socialist government not only did not reduce the deficit but increased it in a few tenths.

Highs also in the Eurozone

Also this Thursday it was known that, in the second quarter of the year, the budgetary imbalance for the euro zone as a whole reached 11.6% from 2.5% in the first three months of the year, while the debt reached 95.1%. “In the second quarter of 2020, marked by the Covid-19 containment measures in all Member States, both the largest recorded deficit in the euro area and the EU since the beginning of the time series as the largest quarterly increase, “Eurostat reported.

The highest levels of public debt in the EU corresponded to Greece (187.4%), Italy (149.4%), Portugal (126.1%), Belgium (115.3%), France (114.1 %), Cyprus (113.2%) and Spain (110.1%), all of them above 100% and above the average for the euro area and the European Union, according to Europa Press.

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