Spain’s debt equivalent to a year’s work for every man, woman, and child
Debt-to-GDP ratio passes 100% for third time in months, reaching levels not seen in 100 years
A new report puts Spain’s bloated national debt into context by measuring it in terms of how long each of the country’s 44 million people would have to work to pay it off. On average, each man, woman and child would have to devote an entire year of work to cancel the debt, according to figures released on Thursday by the Independent Fiscal Responsibility Authority (Airef).
Spain’s public debt-to-GDP ratio, which compares the amount of the debt with the size of the economy, hit 100.5% in June of this year. The Airef report noted that this is the third time in recent months that the threshold of 100% had been passed, a milestone that had not been seen in Spain since the 1898-1909 period. Between January and March this year, Spain’s national debt rose to €1.095 trillion.
On a positive note, Airef noted that the evolution of Spanish debt-to GDP is on a downward path
Spain is now the sixth-most indebted economy in the euro zone behind Greece, Italy, Portugal, Cyprus and Belgium, the watchdog noted.
The Airef report states that there are significant differences between the amounts owed by each of Spain’s regions, some of which are more heavily indebted than others. Residents of the western region of Extremadura are the worst off, and would each have to contribute 484 days of work to cancel their administration’s share of the debt.
At the opposite end of the scale, people in Madrid would only have to put in 255 days, partly reflecting the capital’s higher GDP.
The estimate was reached by taking the ratio of debt to GDP, then multiplying it by 365. The national debt was shared out based on the population and then divided by GDP. In other words, the report divides the amount required by each individual, including children and retirees, rather than by salaries.
On a positive note, Airef noted that the evolution of Spanish debt-to-GDP is on a downward path, and will be more so from 2018 onward. However, the report also warns that the EU target of a government debt-to-GDP ratio of no more than 60% will not be reached before 2036.
English version by Susana Urra.