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ECONOMY

Spain’s debt rating gets another upgrade

Canadian credit rating agency DBRS said on Friday it has lifted Spain's rating to "A" from "A (low)" citing the country's "strong economic recovery and progress reducing the fiscal deficit in recent years".

Spain's debt rating gets another upgrade
Spain's Economy Minister Roman Escolano. Photo: Juan Mabromata/AFP
“DBRS considers structural improvements in the Spanish economy have strengthened the prospects for sustainable growth,” it said in a statement. “Against this background, DBRS anticipates that higher revenues and expenditure control will allow the Spanish government to continue to reduce its fiscal deficit in coming years.”
 
Another ratings agency, Fitch, had upgraded Madrid's sovereign debt rating in January while S&P Global followed suit last month.
 
DBRS said it believed Spain's “strong economic and fiscal performance” would continue “largely unaffected” by political tensions in Catalonia over the wealthy northeastern region's independence drive.
 
“The economic impact has been confined to the regional economy, and largely offset by stronger external demand,” it said.
 
Catalonia, which was previously an autonomous region, remains under direct rule from Madrid, which was imposed after the region declared independence in October.
 
Spain's central bank last month increased its growth forecast for 2018 to 2.7 percent from 2.4 percent as the government plans to reduce income tax for some workers and hike wages for civil servants. It said this reduction in the tax burden would however lead to a slower drop in the public deficit this year, which it predicts will reach 2.5 percent of GDP — still below the 3.0 percent limit set by the European Union.
 
Spain posted a public deficit of 3.07 percent in 2017, just below its target of 3.1 percent agreed with Brussels.
 
Economy Minister Roman Escolano welcomed DBRS' announcement, saying it “reinforces international recognition of the robust recovery of the Spanish economy”.

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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