Government debt to GDP increased to 98.0% in the euro area and 90.0% in EU

April 26, 2021

The government debt to GDP ratio for the fourth quarter of 2020 in the euro area was £11,107.74 billion (98.0%) relative to £11,113.29 billion (97.2%) at the end of the third quarter of 2020. It was noted that the fourth quarter was impacted by policy responses to the COVID-19 containment measures, which resulted in rise in financing needs. According to a report published by Eurostat, the statistical office of the European Union, the rise Government debt to GDP is due to two factors, increase in government debt and decrease in GDP. It was also reported that, “in the EU, the ratio increased from 89.7% to 90.7%. Compared with the fourth quarter of 2019, the government debt to GDP ratio rose in both the euro area (from 83.9% to 98.0%) and the EU (from 77.5% to 90.7%).

In addition, debt securities accounted for 82.1% of euro area and for 81.8% of EU general government debt at the end of the fourth quarter of 2020. Whereas loans constituted 14.6% and 15.1% in the euro and EU, respectively. Currency and deposits consisted of 3.3% of the euro area and 3.2% of the EU government debt. It was noted, “due to the involvement of EU Member States’ governments in financial assistance to certain Member States, quarterly data on intergovernmental lending (IGL) are also published. The share of IGL as percentage of GDP at the end of the fourth quarter of 2020 amounted to 2.0% in the euro area and to 1.7% in the EU.”

Government debt at the end of the fourth quarter 2020 by Member State

Notably, at the end of the fourth quarter of 2020, the highest ratios of government debt to GDP were observed in Greece (205.6%), Italy (155.8%), Portugal (133.6%), Spain (120.0%), Cyprus (118.2%), France (115.7%), and Belgium (114.1%), and the lowest in Estonia (18.2%), Luxembourg (24.9%) and Bulgaria (25.0%).

In comparison to the third quarter of 2020, seventeen Member States experienced a rise in their debt to GDP ratio at the end of the fourth quarter of 2020 and ten registered a decrease. Notably, “the largest increases in the ratio were observed in Hungary (+6.5 percentage points – pp), Spain (+6.0 pp), Greece (+5.9 pp), Austria (+5.0 pp), Romania (+4.2 pp) and Portugal (+3.1 pp). The largest decreases were recorded in Ireland (-2.8 pp), Latvia and Luxembourg (both -1.2 pp), and Cyprus (-1.0 pp).

All Member States reported growth in their debt to GDP ratio at the end of the fourth quarter of 2020 in comparison to the fourth quarter 2019. The largest increases in the ratio were registered in Greece (+25.1 pp), Spain (+24.5 pp), Cyprus (+24.2 pp), Italy (+21.2 pp) and France (+18.1 pp).


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