Spain's debt service costs could surge 66% as interest payments rise sharply
The think-tank Funcas warns that Spain's interest outlays on public debt may jump 66% in the coming years, dramatically increasing annual spending.
According to Funcas, the combination of rising inflation and continued ECB tightening is set to raise Spain's public-debt interest payments by 66%, resulting in an extra €84.6 billion of spending from 2026 through 2031. If price pressures ease, the increase would be more modest, with annual interest costs climbing by roughly €20 billion. Throughout this period, the debt-to-GDP ratio is projected to hover between 96% and 97.4%, while the fiscal deficit is likely to exceed 3% starting in 2030.
Economic growth is forecast at 1.8% for 2027 and 1.7% for 2028, with inflation expected to stay above the ECB's 2% target. Funcas cautions that higher interest burdens will limit the government's ability to respond to external shocks or a potential recession.
Why it matters
Rising debt-service costs could strain Spain's budget, limiting spending on public services and infrastructure.
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