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ECONOMY

EU warns Spain over high deficits

The EU on Monday kept France and Spain on notice for excessive public spending, but absolved bailed-out Portugal after it stayed within the bloc's deficit limit for the first time since 2007.

EU warns Spain over high deficits
Photo: Scornejor/Depositphotos

The European Commission, giving its opinions as part of its annual assessment of EU national budgets, also singled out Italy for running a worryingly high public debt.

It said Portugal had left the commission's so-called excessive deficit procedure, becoming the first bailed-out nation from the eurozone debt crisis to fall back into the bloc's economic good graces.

For Portugal “this is extremely good news,” EU Economy Commissioner Pierre Moscovici told a press conference.   

The commission said that Portugal's deficit fell to 2.0 percent of annual output in 2016, well clear of the EU's limit of 3.0 percent.    

But France and Spain are recurring EU rule-breakers when it comes to running deficits.

Freshly-elected French President Emmanuel Macron has vowed to reduce public overspending with tough reforms and spending cuts. The deficit in France hit 3.4 percent last year.

Spain, which suffered a major real estate crash in the worst of the debt crisis, saw its deficit land at 4.5 percent of output last year, one of the highest in the EU.

Italy, with an accumulated debt of 133 percent of gross domestic product in 2016, was in major breach EU rules which limit debt to 60 percent of GDP. 

READ ALSO: Spain admits it will miss budget deficits…again

ECONOMY

Spain’s middle-class youngsters the most likely to end up poor across all EU

Spain leads the ranking of EU countries with the highest risk of young people ending up in poverty as adults, despite coming from families without economic difficulties.

Spain is the fourth EU country with the highest inherited poverty
Spain is EU country with most middle-class young people who end up poor. Photo: Jaime ALEKOS / AFP

Spain is also the fourth EU country with the highest rate of inherited poverty risk, according to Eurostat, the EU Statistical Office.

Data on intergenerational poverty indicates that there is a correlation between the financial situation of the household you grew up in and the risk of being poor when you reach adulthood and in Spain, there is a strong link. 

The latest statistics available from 2019 show that the at-risk-of-poverty rate for the EU was 23 percent among adults aged 25 to 59 who grew up in a poor financial situation at home when they were 14 years old. This is 9.6 percentage points more than those who come from families without financial problems (13.4 percent). 

READ ALSO: Spain’s inflation soars to 29-year high

How the situation in Spain compares with the EU

Spain has become the EU country with the highest risk of poverty among adults who grew up in families with a good financial situation  – 16.6 percent.

This was followed by Latvia with 16 percent and Italy with 15.9 percent.

That statistics also show the countries where it is less likely to be poor after growing up in households without economic difficulties. These include the Czech Republic (5.9 percent), Slovakia (7.9 percent) and Finland (8.5 percent).

The overall poverty rate in the EU decreased by 0.1 percentage points between 2011 (13.5 percent) and 2019 (13.4 percent), but the largest increases were seen in Denmark (1.9 points more), Portugal (1.8 points), the Netherlands (1.7 points) and Spain (1.2 points).  

On the other hand, the biggest decreases in the poverty rate were seen in Croatia (-4 percent), Lithuania (-3.6 percent), Slovakia (-3.5 percent) and Ireland (-3.2 percent).

READ ALSO: Spain’s government feels heat as economic recovery lags

Inherited poverty

The stats revealed that Spain was also the fourth country with the highest rate of inherited poverty risk (30 percent), only behind Bulgaria (40.1 percent), Romania (32.7 percent) and Italy (30.7 percent).

This means that children of poor parents in Spain are also likely to be poor in adulthood. 

The countries with the lowest rate of inherited poverty risk were the Czech Republic (10.2 percent), Denmark (10.3 percent) and Finland (10.5 percent).

The average risk-of-poverty rate for the EU increased by 2.5 percentage points between 2011 (20.5 percent) and 2019 (23 percent), with the largest increases seen in Bulgaria (6 points more), Slovakia and Romania (4.3 points), Italy (4.2 points) and Spain (4.1 points).

The biggest drops were seen in Latvia (-8.5 points), Estonia (-8.0 points) and Croatia (-2.3 points). 

The largest gaps in people at risk of poverty when they reach adulthood were in Bulgaria (27.6 percentage points more among those who belong to families with a poor economic situation as teenagers compared to those who grew up in wealthy households), Romania (17.1), Italy (14.8), Greece (13.5) and Spain (13.4).

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