Spain has reduced its public debt below the symbolic threshold of 100% of GDP for the first time in six years, marking a sharp contrast with France, which continues to face mounting borrowing costs and a debt burden exceeding 117% of national output.
A Symbolic Milestone Reached Ahead of Schedule
Spain’s public debt stood at precisely 99.9% of GDP in July, according to official figures, representing a decline of 2.4 percentage points over just one year. The government led by Socialist Prime Minister Pedro Sánchez had set a target of bringing debt below 100% of GDP before the end of 2026 — a goal now achieved several months ahead of schedule.
The total outstanding debt of the Spanish state currently amounts to €1.744 trillion. By comparison, France’s public debt exceeds €3.5 trillion, equivalent to just over 117% of its GDP — more than double Spain’s burden in absolute terms.
From Pandemic Peak to Sustained Decline
Spain’s fiscal improvement represents a remarkable turnaround from the darkest days of the Covid-19 crisis. In March 2021, the pandemic-driven explosion in public spending pushed Spanish debt to a peak of 124% of GDP. Since then, the trajectory has been consistently downward, supported by the vigour of the Spanish economy.
Key drivers of this recovery include:
- A booming tourism sector that continues to attract record numbers of visitors
- Robust household consumption sustained by minimum wage increases
- Strong business investment across multiple sectors
- A favourable tax regime designed to stimulate economic activity
Economic Growth Outpaces the Eurozone
In the second quarter of this year, Spain’s economy expanded by 0.7% — nearly double the growth rate of the broader eurozone — despite the economic repercussions of the war in the Middle East. The Spanish government now anticipates growth of 2.6% for 2026, following 2.8% last year.
France, by contrast, is projected to grow by no more than 0.4% to 0.5% under the most optimistic scenarios. The gap in economic performance between the two neighbours has become increasingly pronounced.
Challenges Remain Despite Progress
Spain’s unemployment rate, hovering around 10%, remains a persistent structural weakness. Inflation also remains elevated at 4.3% as of August. Nevertheless, the combination of wage increases, advantageous fiscal policies, and strong tourism revenues has allowed Madrid to steadily improve its public finances while maintaining economic momentum.
The divergence between Spanish and French fiscal trajectories comes as Paris prepares its 2027 budget amid ongoing debates over deficit reduction and the cost of servicing its substantial debt. France currently pays elevated interest rates on its borrowing, further straining public finances.
