Spanish debt hits record | Bangkok Post: business

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Spanish debt hits record

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Spain's public debt reached a record high at the end of the first half of 2012, official data showed Friday, fuelling concerns that the country will need a full-blown financial bailout. 

The debt stood at 75.9% of output at the end of June, according to the Bank of Spain, up from 66.7% during the same time last year and close to the government's target for the end of the year of 79.8%.While Spain's public debt is below the eurozone average of 88.2%, it has risen sharply following the collapse of a property bubble which caused tax revenues to plunge and social spending on items like jobless benefits to soar. Spain has 30 billion euros in debt repayments coming due in October, and investors believe the country will soon seek a full-blown bailout. The struggling country's public debt has ballooned from a pre-economic crisis low of 36.3% of gross domestic product in 2007 to 69.2% at the end of last year.Prime Minister Mariano Rajoy's right-leaning government, in office since December, has raised taxes and made steep spending cuts to put its finances in order, sparking widespread street protests.But with Spain facing a worsening recession, high borrowing costs and looming debt repayments including about 30 billion euros (US$38 billion) in October, investors believe the country will soon seek a full-blown bailout.Madrid has already accepted a eurozone rescue loan of up to 100 billion euros to save banks still reeling from a 2008 property market crash.The government predicts the public debt will continue to rise and will reach 82.3% in 2013 before easing slighly to 81.5% the following year.Spain's 17 powerful...

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