ARCHIVED - The decision by Europe that will ramp up the cost of living in Spain even more
ARCHIVED ARTICLE
The European Central Bank will soon stop buying up public debt from Spain, increasing inflation even further
Due to the sharp rise in inflation, the European Central Bank (ECB) has confirmed that it will end its debt purchases in the third quarter of this financial year, stating that “inflation has risen significantly and will remain high over the coming months”.
Christine Lagarde, President of the ECB, has said that they will stop buying up debt this year. The ECB is the biggest buyer of public debt in Europe. For countries such as Spain, Italy and Greece, it is practically the only buyer of public debt, so if between now and July it stops buying debt, these countries will have to look for new buyers.
This will have a direct effect on the cost of living in Spain. Nuria Caballero Valentín, an expert in financial freedom, explained that “For some time now, like other countries, Spain no longer has enough money to take on everything that a welfare state assumes. So, one way to get money is through taxes, another is to issue banknotes, economic expansion, and the big source is to issue debt. It is the way to get money in exchange for ensuring that it is a powerful state and that it will have the future capacity to pay back that money.”
She also outlined how this rising level of public debt will affect the bank balances of all people living in Spain for several generations to come: “It is a great disaster. Spain is going to continue to have debt and it is estimated that it will take 20 years to pay back all the debt it has or to remain halfway stable. In other words, future generations will continue to pay off the debt.
“This is going to affect us in the sense that interest rates are going to rise and inflation is going to increase. In short, the lower-middle class are the ones who always suffer.”
This will come as a blow for those living in Spain who have already been hit by inflated energy prices and the cost of consumer goods. However, Caballero Valentín says there is cause for optimism: “The good thing is that there are policies that try to reverse this situation and which say that we can’t get into too much debt.”
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