Thursday 21 September 2017

Euro debt burden still growing, with Ireland's ranked fourth highest

Spain's Treasury Minister Cristobal Montoro, front, with Prime Minister Mariano Rajoy and his deputy, Soraya Saenz de Santamaria in Madrid yesterday
Spain's Treasury Minister Cristobal Montoro, front, with Prime Minister Mariano Rajoy and his deputy, Soraya Saenz de Santamaria in Madrid yesterday
Thomas Molloy

Thomas Molloy

DESPITE austerity measures all over Europe, the euro area's debt burden just gets bigger and bigger.

Ireland's debt burden is now the fourth biggest in the eurozone, according to Eurostat.

Average government debt as a percentage of gross domestic product inside the eurozone rose to 90pc in the second quarter from 88.2pc in the first quarter, it added.

Ireland's debt jumped to 111.5pc of GDP from 108.5pc at the end of the first quarter, despite spending cuts and tax hikes introduced last December.

That's the highest debt levels for Ireland since the euro was introduced in 1999 and almost twice the EU limit of 60pc of GDP.

Ireland was not alone, 19 other EU states reported an increase in their debt-to-GDP ratio from the first quarter, while six had a decrease and one country's debt remained stable.

Greece, which sparked the fiscal crisis, had the highest debt burden at 150.3pc of GDP at the end of June, up from 136.9pc, followed by Italy at 126.1pc and Portugal at 117.5pc.

In Germany, Europe's largest economy, the debt burden rose to 82.8pc of GDP from 81.1pc. Estonia had the lowest level in the 27-nation EU at 7.3pc. Bulgaria (16.5pc) and Luxembourg (20.9pc) were also well below average.

Spanish Prime Minister Mariano Rajoy said there was a case for easing budget-deficit targets set by the EU as the recession undermined tax revenue.

"Things could be done more calmly, taking into account especially that we are in a recession but, in any case, I can't give up on Spain's commitments."

Mr Rajoy's comments came as Europe's fourth-largest economy contracted for a fifth quarter between July and October. The EU has set Spain a deficit goal of 6.3pc of GDP this year, after overspending amounted to 9.4pc last year, the same as Greece's and the second-highest shortfall behind Ireland.

Spanish bonds fell for a fourth day after Moody's cut the credit ratings of five regions and the Bank of Spain said the recession will worsen in coming months and jeopardise budget targets.

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