Spain has gone from a public debt of 384.6 billion euros in 2007 to more than 1.445 trillion euros in April 2022, almost four times more.  In just one year the debt has increased by 55,760 million euros, more than 150 million euros a day. The liabilities of each of us now exceed 30,000 euros. 

Although Spain’s public debt fell by 8,427 million euros in April, according to data from the Bank of Spain, this figure can be misleading as the level of indebtedness is still rampant and is expected to continue to grow in the medium and long term.

Despite the slight decrease, debt remained above 1.445 trillion euros in April, or 117.06% of GDP. This is a level not reached in Spain since the end of the 19th century. The only developed economies that currently exceed this percentage are Japan (259 %), Greece (193 %), Italy (150 %) and the United States (134 %).

Spain, along with Greece, Italy, Portugal, Cyprus, France and Belgium, is one of the Eurozone countries whose public debt exceeds 100 % of GDP, although the Maastricht Treaty set a target that debt should not exceed 60 % of GDP. These are not irrelevant economies, as the seven countries together account for more than half of the Eurozone’s GDP.

A burden on the economy

Put in perspective, the growth of Spain’s public debt has been shocking. In just 15 years the volume of debt will almost quadruple, since in 2007 it stood at 384,662 million, or 35.8% of GDP. And if we look at the most recent developments, between April 2021 and April 2022, the debt has increased by 55.76 billion euros, a growth of more than 150 million euros per day.

What does all this mean for our individual pockets? Each of us owes more than 30,000 euros, a figure we will have to pay at some point. Given that the average salary in Spain in 2021 was 26,832 euros, not even working a whole year for free would pay off the debt. Moreover, this debt has increased in the last year by around 1,200 euros per person.

Paying off Spain’s current public debt is simply utopian. A report by Allianz last year calculated that it will take Spain 89 years to return to pre-covid-19 debt levels, so that would be in the 22nd century, while Germany would return to pre-pandemic levels by the end of this decade.

Higher interest rates

The current level of debt forces us to pay more than 30,000 million euros a year in interest alone, which is equivalent to more than 600 euros per person, and everything indicates that this amount will grow due to the tightening of financing conditions.

The rating agency Moody’s warned at the beginning of June of the deterioration in the sustainability of Spanish public debt and estimated the increase in interest payments due to the rise in the CPI at more than 4 billion euros, given that 5.7% of Spanish debt is linked to inflation. Each percentage point increase in prices is equivalent to 600 million euros more in interest, according to Moody’s.

The president of the Independent Authority for Fiscal Responsibility (Airef), Cristina Herrero, stated a few days ago that the changes in the European Central Bank’s monetary policy will make it more expensive to finance Spanish public debt by 12 billion euros, which could rise to 14 billion euros by 2025. 

According to the Airef, the difficulties in reducing the State’s primary deficit could cause public debt to reach 140% of GDP in 2040. In fact, a report by this body warned in May that debt will start to rise from 2025 onwards if the structural deficit of 4 % is not reduced.

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