The taxing question

However, those dirty words ‘tax’ and ‘raising’ are now on the lips of various politicians as Spain begins trying to figure out how it is going to make the numbers add up as it sets about bailing out the country and shoring up the economy. Public coffers have fallen to levels of debt not seen since the beginning of the last century.

All indications suggest that the Spanish government will need to introduce new measures to get the economy back on track. The question is how.

According to several experts, Spain may decide to increase taxes, cut social spending or raise the retirement age.

The government estimates that growth will fall by 9.2% in 2020, that debt will rise to 115.5% of Gross Domestic Product (GDP) and that the deficit will reach 10.3% (more than €100 billion).

Spain already has the third largest deficit in the European Union which Madrid hopes will be forthcoming with mountains of cash, but the whole of the EU in more of less the same boat, Madrid may have to look elsewhere to plug the gap and that could be our wallets.