The second seminar on “Structural Challenges of the Spanish Economy”, by Pablo Hernández de Cos, focused on government deficit and public debt

Last Monday, February 10, CUNEF Universidad hosted the second seminar of the series “Structural Challenges of the Spanish Economy”, given by Pablo Hernández de Cos, former Governor of Banco de España (2018-2024), incoming Managing Director of the Bank for International Settlements (July 2025) and CUNEF alumnus. In this seminar, entitled “The sustainability of public finances”, Mr Hernández de Cos stressed the following key ideas:

• Spain’s fiscal imbalance is high, both in historical terms and compared to other nations. In Q3 2024, the debt/GDP ratio stood at 104.3%, while the government deficit/GDP ratio was 3.2%.
• Spanish public deficit is highly structural.
• Looking ahead, Spain needs to consider increasingly high public spending pressures caused by an ageing population, as well its other commitments, which include, for example, Defence.
• Existing simulations show an upwards trend in the public debt/GDP ratio unless the government implements a fiscal consolidation plan.
• The new Stability and Growth Pact, approved at the end of 2023 by EU members, will require significant fiscal consolidation efforts, albeit not as strong as those made in the years immediately after the 2008 crisis.
• The 2025-2028 Medium-Term Structural-Fiscal Plan, presented by the Spanish Government last fall, proposes a scenario of fiscal consolidation without providing sufficient detail of the pertinent measures.
• The fiscal consolidation process in Spain should be gradual, involve all public administrations, and include a comprehensive review of the tax system and of the efficiency and effectiveness of public spending.