Spain has the largest increase in government debt of all euro area countries. Since 2019, Spain’s public debt has increased by 20%. This increase is not only due to the pandemic, government debt has also been rising for years before the corona crisis.
Recent years have been unprecedentedly challenging for European public finances. Every year Eurostat measures various indicators that say something about the financial health of countries. In several euro countries, government debt grew by double percentage points between 2019 and 2021.
Spain reached the highest government debt of all time earlier this year
In the case of Spain, the increase was even more than 20%. In 2019, the government debt amounted to 98.2% of GDP and in 2021 this percentage has increased to 118.3%. A record level despite a slight decline in 2020. In the second quarter of this year, it was already announced that the Spanish government debt had reached an all-time high. In August 2022, the national debt amounted to €1.49 trillion.
This increase of more than 20% of the Spanish government debt is far above the average increase of 11.5% of the government debt of all euro countries combined. In the Netherlands, for example, government debt rose slightly from 48.5% of GDP in 2019 to 52.4% in 2021. Comparable economies of Spain, such as Italy, also showed larger increases (from 134.1% to 150.3%). but not nearly as extreme as in Spain.
Legacy from before the crisis kills Spain
According to Eurostat analysts, this extreme increase cannot be attributed solely to the corona crisis. All countries have suffered from this. According to them, this is a legacy from well before the crisis and pre-existing public debt has led to public spending levels well above 50% of GDP in recent years.
Brussels states that the government debt of countries should be below 60% of GDP for a healthy financial situation. In reality, only 14 of the 27 countries of the European Union achieve this.