The cost of insuring Spanish debt against default hit new highs after leaders from major economies failed to initiate any major changes in policy at the Group of 8 summit this weekend.
Spain's economy continued to shrink in the second quarter, Finance Minister Luis de Guindos said; more bad news after the government said on Friday that the 2011 deficit is wider than previously stated because of revised regional administration-debt figures. The government raised on Friday the deficit figure for 2011 to 8.9 per cent, from 8.5 per cent of GDP, after the regions of Madrid, Valencia, Andalusia and Castile-Leon gave the central government more detailed information on their overdue bills with suppliers.
Mr de Guindos said gross domestic product data for the second quarter point to a fall in line with that of the first quarter, when GDP contracted at a 0.3 per cent quarterly rate. The trend is in line with the government forecast of a contraction of 1.7 per cent for the full year.
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