Spain is the fourth European country that has increased its debt over GDP the most since 2019 and is already ahead of Portugal
Spain is now the fourth country in the eurozone in which public debt has increased the most since the pandemic broke out.. Spanish national liabilities reached 1.57 trillion euros in the second quarter, which represents 111.2% of the country's GDP. This figure is 13 points higher than what was recorded when the coronavirus arrived and reflects an increase in debt that has little parallel in the rest of the European economies.
Only France, whose debt ratio has grown 14.5 points since then, the Czech Republic and Romania surpass Spain in this section. In comparison, eurozone countries have skyrocketed their debt measured over GDP by 6.2 percentage points since 2019, half what has happened in Spain.
This is clear from the public debt and deficit data until the second quarter of 2023 published by the European statistical office Eurostat.. Another conclusion offered by the figures released this Tuesday is that Spain has jumped from fifth to fourth place on the list of countries that accumulate the most debt in relation to the size of its economy.. This is because Portugal, which until now occupied fourth place, is reducing its debt ratio at a faster rate than Spain.. In this way, the most indebted EU countries in the second quarter were Greece – with a debt of 166.5% of its GDP -, Italy (142.4%), France (111.9%) and then Spain, with its 111.2%.
Spanish public debt began to grow in 2020 due to the exceptional increase in public spending launched to combat the pandemic. The State made an effort with few precedents in history and financed the ERTE and all the exceptional medical expenses derived from the pandemic. To a greater or lesser extent, all EU countries pulled out their checkbook and went into debt to overcome the trance of the pandemic.. Then came the war in Ukraine and energy support measures, which have added more pressure on public spending. These two factors have left the country's public finances battered, with a debt level that is still above the 98.2% recorded in the fourth quarter of 2019.
Public debt reached 125.3% of GDP in the first quarter of 2021, at a time when the economy had barely begun to recover from the collapse of 2020 and public spending was skyrocketing. However, the economic recovery of 2021 and 2022 and the disappearance of the bulk of pandemic spending once the health crisis was overcome have allowed Spain to somewhat redirect the situation.. Since then, the debt ratio has fallen 14 points and the Government expects it to continue doing so throughout this year until it is below 110% of GDP in 2023.
However, organizations such as the Bank of Spain or Airef – the independent watchdog of Spain's public finances – have warned on several occasions that from now on adjustments will be necessary for the debt ratio to continue declining.. That is, the Government will have to adopt measures that increase public income (mainly raise taxes) or cut spending so that the debt continues to decline.. Something that will be decisive in a year in which the fiscal rules of the European Union will operate again.
Debt ratios are the official metric used by the European Union to analyze the sustainability of the public finances of member countries.. By relating the size of the debt to the size of the economy that has contracted it, the capacity of each country to meet its financial obligations is better reflected.. In other words, it is not the same as a State with an economy like Spain's – which produced goods and services worth almost 1.4 trillion euros last year – owes almost 1.6 trillion euros to do so. a country like, for example, Estonia, which closed last year with a GDP of about 35 billion euros.