Spanish debt reaches record level

Spain’s public debt reached a record high in June, the country’s central bank said.

The figure has risen to 942.8bn euros (£792.5bn; $1.3 trillion), equal to 92.2% of the country’s entire economic output, the bank said.

This is nearly 15% higher than the same period last year and above the Spanish government’s target limit of 91.4%, despite severe public spending cuts.

Austerity measures have led to street protests as unemployment now tops 26%.

Prime Minister Mariano Rajoy’s government is aiming to reduce public spending by 150bn euros between 2012 and 2014, but rising unemployment and the consequent benefit payments, is making this target difficult to reach.

The bank believes public debt could top 100% of gross domestic product over the next three years, its highest level in more than a century, as the government struggles to revive the country’s flagging economy.

Bank borrowing

Mr Rajoy may derive some comfort from other figures showing that the country’s debt-laden banks have been successfully reducing their borrowing from the European Central Bank (ECB) over the year.

Spanish banks borrowed 249.3bn euros from the ECB in August, making it the 12th successive month their borrowing has fallen.

In August 2012, they borrowed 411bn euros from the ECB, a record high, reflecting almost total lack of investor confidence in the country’s stricken banking sector.

The banks received 41bn euros of EU bail-out funding in 2012.