The debt of companies and households was reduced to 111.6% of GDP in 2023, about 30.2 billion

In 2023, both homes like businesses in Spain they reduced their debt by 30.2 billion euros due to high interest rates. This decrease led to the consolidated debt of these sectors being reduced by almost twelve points to 111.6% of GDPits lowest level since 2002, when interest rates reached their highest levels since the creation of the euro.

Both families and companies made considerable efforts to reduce their level of debt and better face the difficulties caused by this increase in interest rates and the subsequent increase in the cost of loans. The latest figures from the Financial Accounts of the Spanish Economy, published today by the Bank of Spain, show that Company debt has decreased by 11.9 billion euros in the last year, standing at 64.7% of GDP, compared to 71.2% the previous year. At the same time, household debt has also decreased by 18.3 billion euros, going from 703.6 billion in December 2022 to 685.4 billion in December 2023. which has led to a reduction in its GDP ratio to 46.9%, compared to 52.3% the previous year. In addition, the increase in employment and the improvement in purchasing power, due to the moderation in price increases, have allowed households to also reduce their debt while continuing to consume. This was one of the factors that drove GDP growth above expectations, reaching 2.5% last year.

The consolidated debt of non-financial corporations decreased from 958.4 billion in the fourth quarter of 2022 to 946.6 billion in December 2023. In terms of GDP, this ratio fell from 71.2% to 64.7%, marking its highest level low since September 2002. If intercompany debt were included, the ratio in December 2023 would be 81.7%, compared to 92.2% the previous year.

If we only look at the private sector, we see that last year, the total debt decreased three times more than that of the State. This reduction in private debt, which totaled 1,632 billion euros at the end of the year, representing a decrease of 1.8%, follows a pattern that has been common since the previous economic crisis.

Net wealth

According to the Bank of Spain, the net financial wealth of Spanish families and non-profit institutions serving households (Isflsh) reached 2.09 trillion euros at the end of 2023, which represents an increase of 9.3 % compared to the previous year. This coincides with a moderation in household debt, which stood at 46.9% of GDP, a level not seen since September 2001.

The Net financial assets of families at the end of the fourth quarter were equivalent to 142.8% of GDP, an increase of nine tenths compared to the previous year. In total, the financial assets of households and Isflsh reached 2.83 trillion euros in 2023, showing an increase of 6% compared to the previous year.

In terms of distribution of financial assets at the end of the period, most of the Household financial assets were held in cash and deposits, representing 38% of the totall. This is followed by shares in capital with 30%, shares in investment funds with 15%, and insurance and pension funds with 13%. It stands out that participations in investment funds were the component that increased its weight the most in households’ financial assets, increasing by 1.1 percentage points compared to the previous year due to its revaluation, while the weight of cash and deposits decreased by 2.7 percentage points.

The figure for the net financial assets of families at the end of the fourth quarter is equivalent to 142.8% of GDP, a ratio that was nine tenths higher than that of a year before.

This increase in investment fund holdings was due to a revaluation of €119.8 billion, as well as a net acquisition of financial assets worth €39.3 billion during the year.