SPAIN: The low private debt 40% of GDP and public rises 60% – EntornoInteligente

<- AUGURE_NOTICIA_INICIO -> SPAIN: The low private debt 40% of GDP and the public up to 60% / World / After more than seven years since the start of the crisis, and having endured a severe adjustment, it should note that the Spanish economy as a whole “has not reduced at all its volume debt “.

The increase in public debt, tripled since 2007, “has far exceeded the reduction in private debt of businesses and households in recent years. So that the total indebtedness of Spain” has grown to higher rates of observed between neighboring countries. “

The only change is that there has been” changed ownership “, a study on Indebtedness in Spain: Who Owes Whom prepared by International Financial Analyst (AFI) for Func.

According to the study, when the crisis began, aggregate debt stood at 253% of GDP. The 212% corresponded to companies and households (83% of the total outstanding debt) and public debt represented the other 41 points of GDP. Since then, Spain has been the country that has reduced its private debt, at 440,000 million euros (40% of GDP).

The most intense sanitation has been in the business sector, “the result of the intensity of the credit crunch” in the construction and promotion. And the rush to reduce dependence on external financing in a context of high costs and less need for new resources to the reduced volume of business. As a result of this adjustment, the corporate debt until the end of 2014 dropped by 30 points of GDP (about 320,000 million).

The household deleveraging has slowed because of income restrictions have suffered and most of this debt is in long-term mortgage loans. Still, household debt has fallen by 12 points of GDP (about 120,000 million). According Afi, the reality of households “is frankly compromised” as many have to spend to pay the mortgage with 50% of their income.

However, the intense effort of private sector deleveraging He has seen “more than offset” by the sharp increase in government debt (AAPP). In this period it has increased by more than 600,000 euros (60 points of GDP) to over a trillion euros, 100% of GDP. According to the Independent Authority Fiscal Responsibility (trade show) 2020 will continue at this rate.

Therefore, the recessionary cycle has resulted in a rise of total debt in Spain at the close of 2014 already exceeded 320 % of GDP (nearly 3.5 billion euros). But with a differentiating factor: public administration accounts for 40% compared to 20% who had at the start of the crisis.

According Afi, all this occurs in a circumstance that adds more complexity to debt management. It is the high banking of our financial system becomes the main banks in return for debt, both private and public. This is a factor that “adds vulnerability in a context in which the banking system, not only in Spain, is developing its primary function in normal conditions.”

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