A net total of €66.2bn (£53bn) was sent abroad, up from €5.4bn in the same month last year and showing an acceleration after €97bn was pulled out of the country in the first quarter of the year. The data shows this capital flight came even before Bankia’s recent troubles and likely €19bn (£15.2bn) bailout, as well as calls for several smaller banks to be given aid.
The figures came as ratings agency Fitch downgraded eight profligate Spanish regions, warning that “considerable additional efforts” are needed if the autonomous communities are to tackle their structural fiscal deficits and begin to bring down borrowing costs.
Falling tax revenue and a lack of wide-ranging structural reforms to public services are both causes for concern in the regions, including Andalucia and the Canary Islands, while risks lie ahead as a large proportion of debt falls due in the second half of the year.
Furthermore, Fitch warned that some of the regions’ ratings rely on the backing of the central government – Mariano Rajoy saw the budget deficit rise in the first four months of this year thanks to handouts to regional governments – and so “any weakening of this support would result in further negative rating actions.”
IMF managing director Christine Lagarde yesterday denied reports that the IMF was considering contingency plans for a Spanish bailout.