The American rating agency S&P stated this Thursday that the process of adjusting the public deficit in Spain could have been ‘faster’ in light of the good economic data collected and warned of the likely failure to meet the target set for this year, at 2.5% of GDP. According to the rating agency in its 2025 forecast presentation, the Spanish public sector remains heavily indebted and has relied its fiscal consolidation on cyclical factors rather than structural reforms. S&P believes that Spain will not meet the 2.5% target set by the government for this year and will deviate by four tenths, reaching 2.9%.
The firm does not consider it impossible to meet the proposed target, but does not see it as feasible without additional measures. According to S&P, the debt ratios of Spain and Germany will ‘gently’ decrease to 98.6% and 61.8% of GDP in 2025, respectively, while those of Italy and France will rise to 137.5% and 113.5% and will continue on an upward trajectory.
Meanwhile, Portugal will reduce its debt from 91.1% this year to just over 80% in 2027. However, S&P does not foresee difficulties in the refinancing conditions of the EU member states, among other things, due to the interest rate cuts that the European Central Bank (ECB) will continue to implement. Spain’s credit rating has been stagnant at ‘A/A-1’ since 2019, but it could improve if it reduces its leverage. Furthermore, S&P has emphasized that Spain has gone from being ‘the laggard in the post-pandemic recovery to leading it.’ Thus, it anticipates that in 2025, Spain will grow by 2.5% and by 2% in both 2026 and 2027.
