Spain increased its public debt by €52 billion in the first quarter of the year, bringing the total debt to over €1.677 trillion. This represents an increase of 3.3% compared to the previous year. This increase occurred despite the withdrawal of most of the “anti-crisis” measures introduced to address the consequences of the war in Ukraine, as well as the inflation and energy crises. Nevertheless, the economic growth spurt contributed to reducing the debt ratio from 106.3% to 103.5%.
Data released on Monday by the Bank of Spain (BdE) show that Spain has seen a decline in its debt ratio since its peak at 119.3% of GDP at the end of 2020. Between January and March alone, the ratio fell by 2.8 percentage points. This is mainly due to the positive performance of the economy, which grew by 2.8% until March, although growth has slowed slightly in recent months.
This situation puts Spain in a better position to meet its upcoming commitments, particularly with regard to the need to increase defense spending. However, Brussels has decided that these expenditures will not be taken into account when achieving its fiscal objectives. In its medium-term budget and structural plan, the government projects that the debt ratio will fall to 98.4% by 2027, 90.6% by 2031, and 76.8% by 2041.
The bulk of the debt is public debt, which amounts to €1.518 trillion, an increase of 4% compared to the previous year and represents 94.2% of GDP. In the other central government units, the debt level was €36 billion (2.2% of GDP), a decrease of 8.8%, while social security liabilities amounted to €126 billion, or 8.6% of GDP. This last item is due to the recovery in pension expenditure, which reached a record high of €13.492 billion in the third month of the year.
Regarding local authorities, the debt of the autonomous communities amounted to €338 billion in March 2025, corresponding to 21% of GDP and an increase of 2.8% over the previous year. Municipal debt amounted to €23 billion (1.4% of GDP), a decrease of 1.1%. The consolidation of public administrations, that is, the debt of the various subsectors that make up this sector, increased by 6.2% over the previous year, to €374 billion, or 23.2% of GDP.
The Stability and Growth Pact sets a maximum limit of 60% for public debt and recommends not exceeding the deficit. Specifically, the European Commission has published its economic forecasts for Spain for 2025 as a whole, raising them by three-tenths to 2.3% compared to the November estimate. Growth will slow to 2% in 2026, and the deficit forecast has been raised to 2.8% from 2.6% in the previous forecast. Brussels also expressed optimism about the debt estimate, which is expected to decline further to 100.9% for 2025 as a whole and 100.8% in 2026.
