Spanish regional government debt is growing more rapidly than the federal deficit. It has swelled by 22% in Q3 of this year compared to just 12.1% during the same period in 2010. More worrisome than the amount of debt is the speed at which it is accumulating. The progression has not gone at a steady pace, but grown more intense before regional and municipal elections.
Because the main goal of Spain's policymakers and government officials is to contain government debt, recent increases are forcing even more cutbacks to regional government budgets in addition to those already mandated by the Spanish federal government. Catalonia is an exemplar of the situation. The most weighed down by debt, it has already begun drastic cuts.
The Partido Popular (PP) will be able to leverage intrinsic synergies that come from heading both the national and regional governments as they outline steps for restructuring debt.
