Spanish public debt has reached a historic high of €1.74 trillion in 2026, representing 101.6% of GDP, according to the OECD. Public spending continues to soar while business investment stagnates and inequality grows.
The public debt of Spain has climbed to a new historic record of €1.74 trillion in 2026, which represents 101.6% of Gross Domestic Product (GDP), according to data from the OECD. The absolute year-on-year increase is 4.3%, and since 2014, debt has grown by €650 billion, when it totalled €1.09 trillion. The international organisation points out that Spain is the developed country where public indebtedness has increased the most.
Public spending sets another record while business investment stagnates
In 2025, total public spending in Spain rose to €764.884 billion, a 5.5% increase from the previous year, equivalent to 45.3% of GDP. However, business investment remains at pre-pandemic levels, highlighting a gap between macroeconomics and the real economy. The Bank of Spain notes that public spending accounts for 25% of the growth of Spanish GDP, while the remaining 75% comes from population growth due to immigration.
According to the INE, Spanish industrial productivity fell by 1.9% in the last year. The Spanish economy relies on volatile sectors such as tourism, which contributes 13% of GDP and 12.7% of employment, but generates low-skilled jobs and low wages. Experts warn that it is necessary to diversify the productive fabric to avoid dependence on a single sector.
Inequality and loss of purchasing power mark the real economy
The poverty rate in Spain stands at 19% of the population, which equates to 9.5 million citizens at risk of poverty, according to the INE. BBVA, in its report How Inflation Has Made Us Poorer, states that the loss of purchasing power between 2020 and 2024 was 20%, and food prices rose by 35.5% during that period, without wages compensating for it. Additionally, the cost of housing has exacerbated the situation.
New retirees receive an average pension higher than the average salary of those under 34 years old, reflecting a generational divergence. Each citizen pays over €2,700 annually in additional taxes compared to 2018, according to sources from the Ministry of Finance. Inequality places Spain among the most unequal countries in Europe, despite macroeconomic growth.
Spending on pensions skyrockets and forces search for solutions
Monthly pension spending reaches €14.397 billion (compared to €6.867 billion in 2010) for 10.49 million benefits, 1.75 million more than 16 years ago. Social Security encourages late retirement with a 4% additional lifetime benefit for each extra year of contribution, between €24 and €134.38 monthly, to avoid an increase in spending of 3.5% of GDP between 2026 and 2050. However, experts consider these to be temporary fixes that do not address the structural problem.
The OECD recommends raising the retirement age to 73 to prevent the collapse of the system. Meanwhile, European aid, which has supported part of the growth, will run out in 2026. The public deficit has been reduced thanks to increased tax revenues, but debt remains at record levels. Political polarization complicates the approval of long-term structural reforms.
For the reader, this situation implies that tax pressure could continue to rise to sustain public spending, while households' purchasing power remains eroded. Investors should keep an eye on the evolution of Spanish sovereign debt, which could affect the risk premium and the country's financing costs. The government's upcoming measures will be crucial to redirect the fiscal path and reduce the gap between macro indicators and public perception.
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