Spain’s national debt is back in the headlines, reaching €1.7 trillion in 2025. The figure may seem astronomical, but the reality is more nuanced. Despite the record amount, the debt-to-GDP ratio has dropped to 103.2%. That’s two-tenths of a percent lower than the previous quarter and a full point below last year. Most of the debt is held by the central government—€1.57 trillion—while the autonomous communities have managed to reduce their liabilities by €4 billion, bringing the total down to €338.8 billion.
Economists point out that after the COVID-19 pandemic, when the debt level soared to 121% of GDP, the situation has gradually stabilized. However, Europe’s target of 60% of GDP seems out of reach for the foreseeable future. The real question is not about the absolute figures, but the country’s ability to service its obligations. As long as debt payments remain manageable, there is little cause for concern. But if control is lost, even a relatively modest debt can quickly become a problem.
Stability factors
The stability of public debt depends on several key factors. First and foremost, it is determined by the rate of economic growth: the faster the economy expands, the easier it is to manage debt payments. The second factor is the cost of borrowing—in other words, interest rates. For households, it’s comparable to rising mortgage rates: as interest rates go up, repayments become more challenging. The third element is the so-called primary deficit, which is the difference between budget revenues and expenditures excluding debt interest payments. If a country spends more than it earns, its debt burden will only continue to grow.
In recent years, Spain has shown moderate growth, which helps contain debt growth relative to GDP. However, the financial market situation can shift at any time. A rate hike in the eurozone could quickly make debt servicing more expensive. In that case, even the current level of indebtedness could become dangerous.
European context
Compared to other European Union countries, Spain is not among the most troubled economies, but it also can’t serve as a model. According to European statistics, Greece (153%), Italy (138%), France (114%), and Belgium (107%) lead in terms of debt-to-GDP ratio. Spain, with 103.2%, is in fifth place, ahead of Portugal (96%). This means that debt sustainability is not just a Spanish concern but a common trend for Southern Europe.
However, experts agree: the absolute figures matter less than the state’s ability to manage its finances. If the economy keeps growing and the budget stays under control, even a high debt load won’t spell disaster. But if growth slows or interest rates rise, the situation could change rapidly.
Risks and Challenges
In the coming years, Spain faces serious challenges. Rising social spending, an aging population, and the need for infrastructure investment could put greater pressure on the budget. At the same time, tighter monetary policy in Europe may make borrowing more expensive. Under such circumstances, even a slight downturn in economic indicators could trigger a rapid escalation of debt burden.
On the other hand, Spain also has strengths. The economy remains fairly diversified, and export industries continue to show stable growth. This provides a certain margin of safety. However, there is no room for complacency: global experience shows that debt crises often begin suddenly and develop swiftly.
Looking Ahead
Today’s level of government debt is not a sentence, but a challenge for economic policy. Spain will have to find a balance between the need to invest in development and the obligation to keep finances in check. In a climate of global instability and rising interest rates, this task becomes especially difficult.
The question of how sustainable the current debt is remains open. Everything depends on how the country will handle new challenges. One thing is clear: the problem cannot be ignored, but there is no need for premature panic either.
