Spanish public debt closed 2023 as the fourth highest in the EU and broke a new record in February by exceeding €1.6 trillion

In 2023, Spain made progress in reducing its public debt, thanks to stronger economic growth than anticipated. However, despite this improvement, the country still found itself among the EU member states with the highest debt ratios, finishing the year in fourth place. While the debt-to-GDP ratio decreased to 107.7%, it is still far from the European objective. Furthermore, the volume of debt continued to increase and reached new records in the early months of 2024, surpassing 1.6 trillion euros in February.

Spain’s public debt level decreased for the third consecutive year, going from 111.6% of GDP in 2022 to 107.7% in 2023, which was slightly better than the government’s forecast of 108.1%. The deficit was also reduced from 4.7% of GDP in 2022 to 3.6% in 2023, in line with the eurozone average and slightly higher than the EU average. Despite these improvements, both indicators still exceed the thresholds set by European fiscal rules, which have been suspended since the start of the pandemic.

While the decrease in the debt ratio aligns with the trends seen in the eurozone and the EU as a whole, Spain’s data remains above average and continues to rank poorly compared to other countries. In 2023, only Greece, Italy, and France had higher debt levels than Spain. However, these countries did see improvements compared to 2022.

The reduction in Spain’s debt-to-GDP ratio was primarily driven by the country’s 2.5% economic growth, which helped mitigate the increase in debt volume. In absolute terms, the debt increased from 1.50 trillion euros at the end of 2022 to 1.58 trillion euros a year later.

Unfortunately, the volume of debt has continued to grow in the first months of 2024, setting new records. In February, the debt of all public administrations increased by 1.2% compared to the previous month, reaching 1.6 trillion euros, the highest figure ever recorded. This growth has been mainly driven by increased spending and inflation.

The State and regional governments have taken on more debt, while the debt of city councils decreased slightly and the Social Security debt remained stable. The State’s liabilities, which account for 90% of the total, increased by 1.3% compared to January. Regional governments also resorted to external financing, raising their debt by 1.2% since January. On the other hand, the debt held by municipalities decreased by 0.5%. The debt of the Social Security increased in annual terms due to loans provided by the State to finance its budget imbalance.