British expat fears as Spanish debt spirals – EU in crisis as Covid economies struggle

Spain: British expat questions enforcement of Covid passes

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The ailing economy may have a negative impact on the 360,000 UK citizens currently living in Spain. According to data published by Eurostat, the statistical office of the European Union, Spain recorded the second-highest deficit across the EU in the third quarter of 2021 and the fourth-highest overall debt across the bloc. The country also recorded the largest increase in the government debt ratio, which increased by 7.8 percent, landing it with the fourth-highest ratio of public debt to GDP across the bloc.

According to FullFact, Spain hosts the largest group of UK citizens out of all EU countries.

In the province of Alicante alone – where more than 25 percent of British expats in Spain live – UK citizens contribute £1.1bn (€1.32bn) to the economy each year.

British citizens also make up 25 percent of all tourist visits to Spain – with vacation spending contributing £11.7bn (€14bn) per year to the economy.

But that may be at risk if a struggling Spanish economy has a big enough impact on the Expat community.

The issues arise as countries across the EU are struggling to recover from the impact of the coronavirus pandemic.

Levels of government debt across the world have soared as a result of the pandemic, with global government debt increasing by 13 percent to a new record of 97 percent of GDP in 2020.

In advanced economies, it saw an increase of 16 percent to 120 percent of GDP.

The UK’s national debt has risen above £2tn, the latest figures published by the Office for Budget responsibility show – close to 100 percent of GDP.

The government is on track to record a budget deficit of £183bn in the financial year to the end of March 2022.

While this is much lower than 2020-21 – which saw the UK record a peacetime record of £320bn – the 2022 figure will be the second-highest on record.

High levels of debt have been a cause for concern across the globe, as previous waves of government debt have resulted in significant financial crises, such as the Latin American debt crisis in the 1980s and the East Asian financial crisis in the late 1990s.

In the EU, the bloc traditionally dictates that governments should strive to have public debt no higher than 60 percent of GDP.

But the rules, known as the Stability and Growth Pact, were suspended as a result of the pandemic.

They were introduced to stop governments from borrowing too much in order to safeguard the value of the euro and maintain fiscal stability.

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The rules are now being reviewed as the level of borrowing that occurred during the pandemic meant they are no longer feasible.

It is also becoming increasingly accepted that the fight against climate change may require huge levels of investment over decades that many argue should be reflected in EU laws.

European Commission Vice President Valdis Dombrovskis said: “We need credible debt reduction pathways.

“But they also need to be realistic and allow for green and digital transition.”

The figures from Eurostat showed that Greece had the highest ratio of public debt to GDP, sitting at 200.7 percent in the third quarter of 2021.

Italy had the second-highest ratio at 155 percent.

Meanwhile, Portugal followed close behind at 130.5 percent.

France, at 116 percent, Belgium, at 111 percent, and Cyprus, at 109 percent, all recorded debt levels above the EU and eurozone average.

The countries with the lowest ratios of debt were Estonia – at just under 20 percent – and Bulgaria at 24 percent.

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