Spain’s budget experiences a serious shortfall

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Spain’s budget deficit hit 8.51% last year, exceeding the 6% target rate set by the European Union.

This figure is even higher than the estimate made by centre-right government who took power in December last year.

Speaking to the Financial Times budget minister, Cristóbal Montoro said in Madrid: “We are going to put the measures in place so that this overshoot is not repeated”.

Montoro said the government plans to send the country’s 2011 data to Brussels by the end of the week.

The Spanish Prime Minister Mariano Rajoy has already appealed to the EU to soften the blow of the official deficit target of 4.4% for this years’ GDP.

The government’s struggle to reach EU targets could mean that the country is poised for an economic recession.

The latest figures will undoubtedly raise concerns for investors, as they highlighted that Spain’s expenditure greatly surpassed the amount it generated in revenue in 2011. Spain’s public sector spend was €91.34 billion in 2011 which is just shy of its 2010 deficit of €98.17 billion.

A series of harsh austerity measures were introduced to the country in May 2010, centering on tax increases and a 5% cut in civil service wages. If the country wants to continue to reduce the size of its debts it will have to drastically rework its fiscal policy and spending projections.

The current government has been left to remedy the damage done by the previous social administration, including a current unemployment rate of 23%.

Transfer Money to Spain

If you are looking to invest in Spain, think carefully about how you will be transferring money to Spain. Foreign currency exchange rates quoted by banks are usually worse than the exchange rates available through specialist currency dealers.

If you are sending money to Spain be sure to compare the market before you purchase your overseas currency.

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