Moody’s puts Spain as the world leader in increasing pension spending more than New Zealand

According to credit rating agency Moody’s, Spain is the country on the planet where pension costs will increase the most over the next ten years. Their calculations not only confirm that it will be the European country with the largest increase in the coming yearsyou As the European Commission has already pointed out in its report on ageing-, But above the world, New Zealand.

This appears in a report Moody’s sent to its clients on the pressure the bill will bring on regional authorities from aging populations. This document includes an estimate for the period 2025-2035 (see attached reproduction). Spain tends to be a spending country on pensions and, in general, everything that comes from old age, including health and dependency. It is one of the few states that has attempted more than 2% of its GDP in a very short period of time. Norway followed by New Zealand and Portugal. On the other end, Recovered Greece, Sweden and Australia will experience only a few tenths of an increase in GDP.

Throughout the report, Moody’s notes that Spain, and in particular, its autonomous communities, is an international leader in the pressure the population bill is putting on its public accounts. «Dependent population growth poses a significant budgetary challenge for governments (…) A large aging population means higher public spending per capita and lower tax revenue. “The steepest increase is expected in the most rapidly aging countries, such as Portugal, Italy and Spain.”

It does not explicitly mention the pension reform approved by the current government in the proposal of the then Minister of Social Security. Jose Luis EscrivaBut still It had already warned after its approval last year that revaluation of pensions with CPI would mask the increase in contribution income.

“If no changes are made, the Social Security deficit will increase to 1.4% in 2030, 3.2% in 2040 and 0.5% in 2022. If no action is taken, this will begin to put pressure on the government’s debt profile by the end of this decade,” he said.

The current report emphasizes that not only the assessment of the state, but also autonomous communities may be affected, as they manage the costs related to health and dependency. “Our analysis suggests that there may be more significant pressures on credit in Spanish communitiesItalian and Austrian regions,” Moody’s notes in that order. It then mentions municipalities in Norway and Denmark and German regions.

The big exception is regional communities. “Some regions have special status that gives them greater fiscal autonomy. This is the case of Sicily, Sardinia, Trentino, Valle d’Aosta and Venice in Italy, the Basque Country and Navarra in Spain. Regions with special status This gives them more power and autonomy to gather and greater flexibility to face the cost pressures of aging.», note Moody’s analysts, who maintain the Basque Country’s credit rating better than the Kingdom of Spain’s because of its covenants and quotas.

Meanwhile, Spain posted a new monthly record for pension spending this July. In July 2024, Social Security allocated 12,793.8 million euros to pay the normal monthly salary of contributory pensions, an increase of 6.4% per year, announced by the Ministry of Inclusion, Social Security and Migration.