Spanish 2012 Social Security Deficit Will Top €10.5 Billion

 

The Spanish Treasury Ministry has revealed the Social Security system in 2012 will have a deficit of €10.5 billion in a document sent to European statistics office Eurostat.

The staggering figure casts fresh doubt over the government's plans to increase pensions in line with inflation.

However, Treasury Minister Cristobal Montoro said on Tuesday the change would not have any impact on the country's overall deficit because the central government would take steps to reduce spending accordingly, suggesting other social services could be cut further.

Spain's public deficit is expected to reach 7.3% of GDP this year which includes one-off capital injections into ailing banks which account for 1% of GDP.