Charles V abdicated the throne of Spain in 1556 and Philip II replaced his father as king of Spain. What Philip II inherited was to have a marked impact on the decades as king of Spain. A country untainted by Protestantism, Catholicism spiritually bound the country together.
Charles had transferred his Burgundian territories to Spain (from Austria) in 1555.
Charles held back the Turks but did not defeat their power in the Mediterranean. In fact, his inability to sustain a campaign against the Turks left Philip with a serious problem in that area.
Charles left Philip a total debt of 36 million ducats and an annual deficit of 1 million ducats. This financial weakness continually hampered Philip and this plight went from bad to worse. Charles admitted that without the financial help from the Spanish Netherlands, he would not have been able to sustain his foreign policy. If Philip lost this source of revenue, it would be a financial disaster for him.
By 1556, 68% of the Spain’s revenue had been marked already to pay off previous loans. Between 1500 and 1550, prices doubled as a result of inflation. Charles’s standard way of dealing with a financial crisis was to increase taxation.
Charles sold off offices and crown land to obtain revenue. He made immediate money by doing this but valuable sources of royal revenue (such as royal salt mines) were lost to private owners and these owners were invariably exempt from tax.
Charles advised Philip to “attend closely to finances and learn to understand the problems involved.” Unfortunately for Spain and Philip, Charles did not heed his own advice.