Both individuals and businesses pulled deposits from Spanish banks, as the country’s GDP continued to fall in the second quarter under austerity measures that have seen consumer spending dry up as additional austerity measures are set to go into effect.
Reuters reported Tuesday that private-sector deposits in Spanish banks were down nearly 5% at the end of July, while Bloomberg reported that its GDP fell 0.4% for Q2 and consumer spending dropped 1%. In Q1 the GDP fell 0.3%. More economic woes are in store, as austerity measures still to come will triple in effect by 2014.
Efforts to trim Spain’s budget will continue, according to a plan released by Prime Minister Mariano Rajoy in July. New budget cuts mandated by the European Union (EU) deficit limit of 3% of GDP will boost austerity measures to 15% of the country’s annual GDP by 2014, making it even harder on a country that already sees some of the highest unemployment in the eurozone.