Eurozone debt surged last year as governments borrowed heavily to keep their economies alive during pandemic lockdowns, with the already most indebted countries adding the most new debt, data from the European Union’s statistics office showed.
Eurostat said aggregated government debt in the 19 countries sharing the euro jumped by 1.24 trillion euros to 11.1 trillion or 98% of its gross domestic product last year from 83.9% in 2019 as the deficit went to 7.2% of GDP from 0.6%.
Greece, already struggling with a mountain of debt after its sovereign debt crisis, saw its borrowings rise by 25 percentage points last year, taking its obligations to 341 billion euros, or 205.6% of GDP – the highest debt in Europe compared to the size of the economy.
Italy had the second biggest debt to GDP ratio of 155.8%, up 21.2 points against 2019, but was the most indebted country in Europe in absolute terms with debt of 2.57 trillion euros.
Estonia, a relative newcomer to the single currency, and Bulgaria – a euro hopeful – were among the best performers with debt to GDP ratios of only 18.2% for Estonia and 25% for Bulgaria.
Germany the eurozone’s biggest economy, saw its debt rise by 10 percentage points to 69.8% of GDP and the second biggest, France, recorded an 18 point increase to 115.7% of GDP.
European Union rules, now suspended for the pandemic, stipulate that governments should strive to have public debt no higher than 60% of GDP. [Reuters]