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EUR | Jul 23, 2021

Government debt-to-GDP up to 100.5% in Euro area and 92.9% in EU

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Rise in debt-to-GDP of 100% is a first ever. (Photo: Erwin Wodicka for europedirect.lt)

The government debt-to-Gross Domestic Product (GDP) for the first quarter of 2021 in the Euro area was £11,430.87 billion, which is 100.5 per cent of GDP.

In comparison to the fourth quarter, debt amounted to £11,107.13 billion, representing 97.8 per cent of GDP, relative to the first quarter of 2020 when debt amounted to £10,258.87, which was 86.1 per cent of GDP. It was noted that the first quarter was impacted by policy responses to the COVID-19 containment measures, which resulted in a rise in financing needs.

According to a report published by Eurostat, the statistical office of the European Union, the rise of Government debt in the Euro area exceeded 100 per cent for the first time. It was also reported that “In the EU, the ratio increased from 90.5 per cent to 92.9 per cent”.

Compared with the first quarter of 2020, the government debt-to-GDP ratio rose in both the Euro area from 86.1 per cent to 100.5 per cent and the EU from 79.2 per cent to 92.9 per cent. In addition, debt securities accounted for 82.6 per cent of the Euro area and for 82.2 per cent of EU general government debt at the end of the first quarter of 2021.

Whereas loans constituted 14.2 per cent and 14.7 per cent in the Euro area and EU, respectively. Currency and deposits consisted of 3.2 per cent of the Euro area and 3.1 per cent of the EU government debt.

Inter-governmental lending within continental Europe

Eurostat pointed out that, “due to the involvement of EU Member States’ governments in financial assistance to the certain Member States, quarterly data on inter-governmental lending (IGL) is also published. The share of IGL as a percentage of GDP at the end of the first quarter of 2021 accounted for 2.0 per cent in the euro area and to 1.7 per cent in the EU.”

Government debt at end of first quarter 2021 by Member State

Notably, at the end of the first quarter of 2021, the highest ratios of government debt-to-GDP were observed in Greece (209.3 per cent), Italy (160.0 per cent), Portugal (137.2 per cent), Cyprus (125.7 per cent), Spain (125.2 per cent), Belgium (118.6 per cent) and France (118.0 per cent). The lowest rates were recorded in Estonia (18.5 per cent), Bulgaria (25.1 per cent) and Luxembourg (28.1 per cent).

In comparison to the fourth quarter of 2020, twenty-three Member States experienced a rise in their debt-to-GDP ratio at the end of the first quarter of 2021 and two registered a decrease, while two remain stable.

“The largest increases in the ratio were observed in Cyprus (+6.5 percentage points – pp), Czechia (+6.3 pp), Spain (+5.3 pp), Slovenia (+5.2 pp), Belgium (+4.4 pp), Malta and Italy (both +4.2 pp). The decreases were recorded in Lithuania (-1.5 pp), and Denmark (-1.4 pp).” according to Eurostat.

All Member States reported growth in their debt-to-GDP ratio at the end of the first quarter of 2021 in comparison to the first quarter of 2020.

The largest increases in the ratio were recorded in Cyprus (+29.5 pp), Greece (+28.6 pp), Spain (+26.2 pp), Italy (+22.1 pp), and Portugal (+18.0 pp).

The lowest increases were observed in Ireland (+1.7 pp), Sweden (+4.5 pp), Bulgaria (+5.0 pp), the Netherlands (+5.6 pp), Finland (+5.9 pp) and Luxembourg (+6.0 pp).

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