Rajoy’s Deepening Budget Black Hole Outpaces Spain’s Cuts

The black hole in Spain’s budget has expanded faster than Prime Minister Mariano Rajoy’s attempt to shrink it, portending the same unrest roiling Greece.

The harshest austerity since the return to democracy in 1978 has failed to contain the deficit as the economy sinks deeper into recession. The shortfall increased in the first half of the year, as it did in the previous 12 months. Even after a sales-tax increase and health-care cuts kick in this quarter, it may still approach last year’s 9.4 percent of gross domestic product, said Ignacio Conde-Ruiz, an economist at the independent Applied Economic Research Foundation in Madrid.