- Public debt stood at 103.2% of GDP in the third quarter of 2025
- Since the pandemic, most of the most heavily indebted countries in the European Union have begun debt correction processes
- AIReF reviews inflation trends in the euro area, which have moderated significantly since the peak reached in 2022
- It also analyses the situation in the financial markets, which have shown high volatility driven by political, geopolitical, and fiscal factors, with uncertainty subsequently easing
- In AIReF’s central scenario, public debt follows a downward path, standing at around 95.2% of GDP in 2030
- Adverse scenarios show that lower economic growth or higher interest rates would slow the adjustment without reversing the downward trend
The Independent Authority for Fiscal Responsibility (AIReF) today published the latest edition of its Debt Monitor, which examines recent developments in Spanish public debt. Public debt stood at 103.2% of GDP in the third quarter of 2025, a year-on-year reduction of 1 percentage point.
Since the peak reached in 2021 (124.2% of GDP), debt has fallen by 21 percentage points. In nominal terms, public debt reached €1.693 trillion, with year-on-year growth of 4%. According to the Bank of Spain’s monthly GDP estimate, the ratio would have fallen to 101.7% of GDP in October.
AIReF notes that, since the pandemic, most of the most heavily indebted countries in the European Union have begun debt correction processes. Greece and Portugal have seen the largest reductions, supported by sharp falls in the deficit and even surpluses. Spain and Italy have also seen significant falls, albeit smaller ones, while France has performed less favourably, with a virtually stagnant ratio and a slight recent uptick, making it the third most indebted country in the EU after Greece and Italy.
Inflation and interest rate trends
In the Monitor, AIReF reviews the inflation situation in the euro area, which has moderated significantly since the peak reached in 2022, reaching the 2% target in May and standing at 2.2% in November, although significant variation persists between countries. Against this backdrop, the main central banks have entered a phase of monetary easing, taking a cautious, data-dependent approach.
In 2025, the European Central Bank has cut rates four times, although in its most recent decisions it has opted to hold them unchanged. In the United States, the Federal Reserve has cut rates three times, to a range of 3.5%–3.75%. These decisions have been accompanied by quantitative tightening through passive balance sheet reduction.
Financial markets, cost of debt, and financing
AIReF also reviews the situation in the financial markets, which have shown high volatility driven by political, geopolitical, and fiscal factors, with uncertainty subsequently easing. In sovereign debt markets, risk perception varies between countries: the risk premium has fallen in Spain and Italy, while in France it remains elevated.
The average cost of new Treasury issues was 2.7% in November 2025, down 74 basis points from the 2023 peak. The average cost of outstanding debt remains contained at 2.31%. Looking ahead to 2026, the Treasury is maintaining a similar strategy to the previous year, with net issuance of €55 billion and gross issuance of €285.677 billion, driven by a higher volume of maturities. The sovereign debt profile presents low refinancing risk, at around 13%, with maturities well distributed over time.
Medium-term projections
In AIReF’s central scenario, public debt follows a downward path, reaching around 95.2% of GDP in 2030, supported by nominal growth and an improving primary balance. Adverse scenarios show that lower economic growth or higher interest rates would slow the adjustment without reversing the downward trend.
International organisations’ forecasts are slightly more favourable. The International Monetary Fund puts debt at around 92.6% of GDP in 2030, while the European Commission and the OECD project somewhat lower ratios than AIReF for the coming years.
Stochastic analysis points to a 71% probability that debt will fall by the end of the projection period. However, from 2030 onwards, inertial dynamics show an upward trend, suggesting that maintaining or reducing debt over the long term will require additional fiscal efforts, mainly through higher primary balances—a significant challenge from a historical perspective.
