Spain's Total Debt Levels Soar, More Than Italy

Nice piece from Robert Peston, BBC Business Editor. He looks at Spain's total debt level, including government, corporate, and financial. The total: 363% of GDP.

"In 1989, Spain's ratio of government debt to GDP - the value of what the country produces - was just 39%. Its ratio of corporate debt to GDP was 49%, the ratio of household debt to GDP was just 31% and financial sector debt was just 14% of GDP. The aggregate ratio of debt to GDP was 133%.

By the middle of this year, the picture was utterly different. The aggregate ratio of debt to GDP had soared to 363% of GDP.

And it was really from 2000 onwards, the euro years, that Spain really got the borrowing bug, with the ratio of aggregate debt to GDP rising by a staggering 171 percentage points of GDP.

The biggest increment over the past 20 odd years has been in the ratio of corporate debts to GDP, which has soared to a staggering 134% of GDP. Spanish companies have become addicted to debt".

He says that Italy's numbers are similar but not for coporate debt, which is much lower.

"But the debts of Italy's private sector are a fraction of Spain's. The indebtedness of Italian businesses is just 81% of GDP and the indebtedness of households just 45% of GDP. Italy's private sector, from the point of view of indebtedness, is in pretty good shape.

So Italy's total indebtedness at the end of last year was 313%, some 50 percentage points less than Spain's."