Business · Economy · 3 hrs ago
Spain's debt interest costs could rise by €20 billion a year by 2031
Funcas warns Spain's annual debt interest costs could rise by €20 billion by 2031 as older bonds are replaced with higher-interest debt.
The forecast puts these payments at about €43.5 billion in 2026 and €63.7 billion in 2031.
Spain's debt is expected to fall to 96% of GDP in 2029, then level off, still well above the European Union's 60% reference level.
Without budget adjustments, Spain's deficit could exceed the EU's 3% limit from 2030.
That would leave the government with little room to respond to a recession or another emergency, Funcas warns.
In a more difficult scenario with higher inflation and interest rates, debt interest payments could exceed €70 billion and the deficit could top 3.5% from 2030.
Funcas says Spain needs budget adjustments to rebuild its financial cushion.
Funcas warns that Spain’s annual public-debt interest payments could rise by about €20 billion, from around €43.5 billion in 2026 to €63.7 billion in 2031.
The think tank says the increase would leave the government with little room to respond to future emergencies or a recession.
Its central scenario assumes inflation falls to 2% from 2029 and 10-year government bond yields decline to 3% in 2030.
Without adjustment measures, Spain’s public deficit would exceed the European Union’s 3% of GDP limit from 2030, Funcas says.
In a more adverse financial scenario, annual interest payments would exceed €70 billion.
- Who
- Funcas issued the warning about Spain’s public finances.
- What
- Annual public-debt interest payments could rise by about €20 billion by 2031.
- When
- The forecast compares 2026 with 2031.
- Where
- Spain.
- Why
- Debt issued at zero interest rates will have to be refinanced at higher rates, according to Funcas.
This story does not have two clearly opposing sides.
Spain’s public-debt interest payments are forecast at around €43.5 billion.
Funcas expects 10-year government bond yields to average 4%.
The central scenario assumes inflation falls to 2% from this year.
The central scenario assumes 10-year government bond yields fall to 3%, while the deficit would exceed 3% of GDP without adjustment measures.
Annual public-debt interest payments are forecast to reach €63.7 billion.
- Interest payments in 2026
- Around €43.5 billion
- Interest payments in 2031
- €63.7 billion in the central scenario
- Increase in annual interest payments
- About €20 billion
- Public debt-to-GDP ratio in 2026
- 98.1%
- EU debt-to-GDP reference level
- 60%
What people are saying
Este resultado pone de manifiesto que el margen de maniobra de las AA.PP. para responder a shocks exógenos o a una posible recesión es prácticamente nulo
intentar generar y elevar el colchón presupuestario para no estar en esa situación de perder completamente el margen de maniobra presupuestario en el futuro