EAE Business School is pleased to present a study entitled ‘Public Debt 2015’, which analyses the public debt situation both in Spain and its Autonomous Communities, and in the European Union and the rest of the world, including a forecast of the levels public debt that we will have over the next five years.
In 2014, the public debt rose to reach 1,019,883 million euros, representing a level of public debt per capita of €21,930 and 98.64% of GDP. Last year, public debt climbed by 6.16%, to surpass the 960.64 billion euros recorded in 2013 and reach almost 1.02 billion euros at which it currently stands. Over the period of analysis from 2008 to 2014, public debt grew by 134%.
Between 2008 and 2014, the rate of public debt as a proportion of GDP increased from 40.17% in 2008, as stipulated in the Maastricht Treaty, up to 98.64% in 2014, representing a level of growth of 146%. Last year, the rate of public debt with respect to GDP rose by 5%.
The report by EAE also forecasts that, in 2019, public debt as a proportion of Spanish GDP will reach 99.64%, meaning that the figure will practically remain stable with respect to the figures recorded last year.
WHAT COMMUNITIES HAVE THE HIGHEST LEVELS OF DEBT?
According to the EAE study, the five Autonomous Communities with the highest rate of public debt with respect to GDP in 2014 were the Community of Valencia, Castilla La Mancha, Catalonia, Balearic Islands and Murcia, with rates of 37%, 33.5%, 32.4%, 29.3% and 25.2% respectively. The least indebted Communities were Madrid, the Basque Country, the Canary Islands, Asturias and La Rioja, with rates of 12.5%, 13.9%, 14.5%, 16.2% and 16.6% respectively.
Last year, none of the Autonomous Communities reduced its rate of public debt with respect to GDP. The Communities that became most indebted in 2014, in other words those which most increased their public debt as a proportion of GDP, were Murcia, Andalusia, Extremadura, Community of Valencia and Asturias, with growth rates over the course of last year of 22.33%, 17.92%, 16.13%, 14.16% and 13.29% respectively. The Communities that best controlled their rate of public debt as a percentage of GDP were Navarra, the Basque Country, Galicia, Castilla y León and Catalonia, with more moderate rises of 1.13%, 6.92%, 7.14%, 8.81% and 9.83% respectively.
With respect to the volume of public debt, the total debt of Autonomous Communities climbed to 236.747 billion euros, representing 23% of the total Spanish public debt. This is 13% higher that the figure for 2013, when the debt of the Autonomous Communities represented 22% of the total. Catalonia, the Community of Valencia, Andalusia and Madrid are the Communities that recorded the highest figures 64.475, 37.376, 29.101 and 24.631 billion euros, representing 66% of the total public debt total of the Autonomous Communities (compared to 64% in 2013). The Communities with the lowest volumes of public debt in 2014 were La Rioja, Cantabria, Extremadura, Navarra and Asturias, with 1.296, 2.428, 3.091, 3.197 and 3.479 billion euros respectively.
In terms of public debt in the councils of cities with over half a million inhabitants, the report drafted by EAE reveals that practically all of the city councils reduced their public debt over the course of the last year. Once again, Madrid headed the ranking of the most indebted city councils in 2014, with debts totalling 5.936 billion euros (approximately half the total debt of Ecuador), followed by Barcelona with 978 millions, Zaragoza with 817 millions, Valencia with 804, Málaga with 638 and Seville with 443. All together, the rest of the provincial capitals had debts of 4.612 billion euros, while all other city councils had a total public debt of 17.583 billion euros. Of the large regional capitals, the only city to increase its public debt in 2014 was Seville, with an increase of 0.6%. The rest of the large regional capitals all reduced the volume of their public debt. The larges reduction was recorded by Madrid, with a decrease of 15.6%, followed by Barcelona at 11.9%, Málaga at 9%, Valencia at 7.8% and Zaragoza at 5.1%.
The residents of Madrid bear the largest debt burden per capita (€1,875), followed by the residents of Zaragoza (€1,227), Málaga (€1,125), Valencia (€1,022), Seville (€636) and Barcelona (€610). All of the cities recorded significant decreases in public debt per capita last year, ranging from -27% in the case of Barcelona to -66% in the case of Zaragoza.
According to EAE, the total debt of the common regime regional governments, Autonomous Community governments, local and island councils and autonomies cities in 2014 was 6.230 billion euros, with the common regime regional governments being the most indebted, owing 3.232 billion euros.
PUBLIC DEBT IN THE LARGEST WORLD ECONOMIES
In the European Union, the five countries with the highest rates of public debt as a proportion of GDP were Greece, Italy, Portugal, Cyprus and Ireland (four of which have had to be bailed out), with ratios del 174, 137%, 131%, 117% and 112% respectively. The countries with the lowest ratios were Estonia, Luxemburg, Bulgaria, Latvia and Romania, with the lowest rates of public debt with respect to GDP in the European Union at 10%, 24%, 25%, 36% and 40% respectively. Spain holds seventh position. In 2014, six countries reduced their levels of public debt as a percentage of GDP, namely Poland, Germany, the Czech Republic, Ireland, Greece and Hungary.
With respect to economies outside of the EU, EAE’s analysis shows that Japan, the United States and Canada are the countries with the highest public debt as a proportion of GDP, with rates of 245%, 106% and 88% respectively. The case of Japan is cause for concern as it owes 4.5 times more than is capable of producing. The top three are followed by Brazil and India, with ratios of debt with respect to GDP of 66% and 60.5% respectively. Last year, only six of the countries analysed recorded decreases in their rates of public debt as a proportion of GDP: Brazil, Canada, Colombia, India, Peru and Venezuela, with decreases between 5% and 11%.
DEBT IN EUROPE VS DEBT IN THE AMERICAS?
The report by EAE Business School gave a comparative overview of the levels of public debt registered in the main economies in Europe and the Americas. While Holland was the country with the lowest rate of public debt as a proportion of GDP out of all of the largest European economies (70%), Argentina is the Latin American economy with the highest rate, reaching 49% in 2014. In other words, the rate of public debt as a percentage of GDP in the European economy wit the lowest ratio is 1.43 times higher than the rate of public debt with respect to GDP in the Latin American economy with the highest ratio.
This differential also grew in comparison to the figure recorded in the previous year of 1.39. Moreover, the rate of public debt as a proportion of a GDP in Greece, the European economy wit the highest rate recorded last year, is 3.55 times higher than the rate in Argentina and 10.5 times more than Chile.
With respect to the volume of public debt, the biggest economies in Europe, Germany, Italy, France, the United Kingdom and Spain, recorded public debt figures higher than the largest Spanish-speaking economy in the Americas, Mexico. The public debt of Germany, Europe’s biggest economy, is 4.64 higher than the Mexican rate. Spain’s volume of debt is 2.22 higher than Mexico’s, 3.55 greater than Venezuela’s and 4.90 times higher than Argentina’s.
In terms of the public debt per capita, the European country with the lowest rate (Portugal, at €21,074) had levels that were 2.24 times greater than the Latin American country with the highest rate (Venezuela, at €9,419). Spain’s public debt per capita is 4.43 times higher than Argentina’s, 5.72 times greater than Mexico’s and 11.57 times higher than Colombia’s.
“The governments in the euro zone are extremely focused on controlling the Public Deficit. In order to reach a reasonable figure, many countries have implemented large-scale structural changes to reduce public sector spending and its needs in terms of financing. By a large margin, Spain is the country that has made the greatest efforts in the shortest time and, although these efforts may appear to have fallen short in view of the figures, a change towards a downward trend can be observed that well enable us to reduce public debt over the next few years”, said Juan Aitor Lago, Director of EAE Business School’s Strategic Research Centre.
– The volume public debt in Spain rose to 1,019,883 million euros in 2014, equivalent to 98.64% of national GDP.
– The volume of debt grew by 6.16% last year, while the debt as a proportion of GDP went up by 5%.
– Between 2008 and 2014, Spain’s public debt grew by 134%.
– The public debt per capita in Spain climbed to €21,930 in 2014, 6% higher than in 2013.
– Forecasts predict that, in 2019, public debt as a proportion of Spanish GDP will reach 99.64%, practically remaining stable with respect to the figures recorded last year.
– The public debt of the Autonomous Communities rose to 236.747 billion euros in 2014, representing 23% of the total Spanish public debt.
– The five Autonomous Communities with the highest rate of public debt as a proportion to their regional GDP in 2014 son Community of Valencia, Castilla La Mancha, Catalonia, the Balearic Islands and Murcia, with rates of 37%, 33.5%, 32.4%, 29.3% and 25.2% respectively.
– The least indebted Communities were Madrid, the Basque Country, the Canary Islands, Asturias and La Rioja, with rates of 12.5%, 13.9%, 14.5%, 16.2% and 16.6% respectively.
– In terms of volume, Catalonia, the Community of Valencia, Andalusia and Madrid recorded the highest figures, with 64.475, 37.376, 29.101 and 24.631 billion euros respectively, representing 66% of the total public debt of all of the Autonomous Communities.
– Madrid City Council was the most indebted council in Spain, with debts of 5.936 billion. With the exception of Seville, all of the large regional capitals reduced their volume of public debt in 2014.
– Greece, Italy, Portugal, Cyprus and Ireland are the countries with the largest public debt.