THE Spanish government, which is still having to operate on a budget brought in by the previous Partido Popular leader Mariano Rajoy in 2017, is now having second thoughts about how much of its allocated 140 billion euro Covid aid package offered by Brussels to use.

The main issue is that Prime Minister, Pedro Sanchez, and his left wing coalition, do not want to lurch the country into further debt.

The aid options on the table are to take around half of the money in the form of grants which, under current stipulations, do not have to be paid back, or the other half in the form of loans which will have to be paid back with interest, and the latter is what the Spanish government is having second thoughts about, along with a number of other European countries such as Portugal and France.

With Spanish debt reaching record levels, balancing the books is going to be a momentous affair, especially as, according to scientists, the worst is yet to come this winter.

Based on that, and the fact that EU countries have until 2023 to cash in on their aid packages, Spain appears to prefer to take a wait and see approach instead of running up a gigantic short term debt, which it will have problems repaying, without turning to tax payers in the form of raising taxes and raising IVA (VAT) which will not sit well with the general public and businesses who are already paying the price.

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