In just a year and a half, the 12-month Euribor has gone from a negative value of -0.502% to a positive value of 4.149% (data from July), which implies a rise of 4.65 percentage points (pp). The Euribor is the reference interest rate most frequently used in bank loans, so this increase represents a very intense increase in the interest paid by companies and families and that forces them to allocate a greater part of their income to face the debt payment. The higher that percentage, the greater the financial vulnerability.
In 2020 (the year in which the Euribor was negative), Spanish companies allocated 11.6% of their gross disposable income to pay interest. It was a percentage higher than the 9.6% of 2019, but not because they paid more interest, but because their disposable income fell in the year of the pandemic. In fact, they paid 8% less interest, with a value of 17,243 million euros. The effort in terms of income destined to pay interest fell in 2021 and 2022, to stand at 9.8% in the latter year. However, in 2022 the effect of the increase in the Euribor is already being felt, since the interest paid by companies increased by 21% (up to 20,590 million euros), an increase that was faced from the strength that meant that their incomes increased 28%. The first quarter of 2023, with a Euribor that has continued to grow, has meant an escalation in the part of the income of companies that they have had to allocate to pay interest, placing the effort at 12.5%. In this way, in the first quarter of 2023, companies have paid 7,791 million in interest, nothing more and nothing less than 86% more (3,595 million more) than just a year before.
In the case of families, given that their level of indebtedness is much lower than that of companies, the percentage of income that they allocate to pay interest is much lower, and stands at 1.8% in 2022. In In the first quarter of 2023, the effect of the rise in the Euribor is already noticeable, with an increase in that effort to 2.5%. Spanish families allocated 15,000 million euros in 2022 to pay interest, and in the first quarter of 2023 there are already 5,116 million, about 1,000 million more (26% more) than in the same quarter of 2022.
The comparison with the EU shows that both Spanish companies and families bear a lower debt burden, since they allocate a lower percentage of their income to pay interest. With data from 2022, the 9.8% effort of Spanish companies contrasts positively with the 14.6% of the EU, and in families the percentage is also lower: 1.8% versus 2%. This better Spanish position is influenced by the intense deleveraging carried out by the private sector in recent years. Thus, from the maximum indebtedness values in 2010 as a result of the excesses of the past, the debt/GDP ratio of companies has fallen 50 pp, and that of families, 34.5 pp, so that the deleveraging of the private sector has been 84.5 points of GDP.
In this way, after presenting in 2010 a level of indebtedness much higher than that of our European partners (37.6 pp more in companies and 21.4 pp more in families), the debt/GDP ratio is currently similar in both cases.
What these figures show is that Spanish companies and families are facing the recent and intense rise in interest rates from a better position than in the past thanks to the effort they have made to deleverage, unlike the public sector. However, in the case of indebted companies and families, the cost of the current rise in interest rates is considerable, as they have to allocate much higher percentages of their income to interest payments. The most vulnerable groups are obviously those that already started with high levels of indebtedness, and that is where we must be vigilant when implementing support measures.
