OFFICIAL figures released yesterday show that the Eurozone’s public debt pushed past 90 per cent of GDP in 2012, despite falling government deficits.
Between 2009 and 2012, government debt as a percentage of the currency union’s GDP has swelled from 80 to 90.6 per cent, while government deficits have dropped from 6.4 to 3.7 per cent over the same period.
The figures hide significant differences between countries: while Germany ran a 0.1 per cent surplus according to the European Commission’s statisticians, Spain’s government ran a deficit equivalent to more than a tenth of its economy in 2012, at 10.6 per cent of GDP.
Greece had the highest proportion of government debt recorded, at 156.9 per cent of GDP. Estonia, which joined the euro area just less than three years ago, posted the lowest ratio of government debt to GDP, at only 9.8 per cent.
The Eurozone country with the highest general public spending as a proportion of GDP is France, where 56.6 per cent of the economy was accounted for by expenditure in the public sector last year.
As it is outside the euro area, the UK produces its own estimates of government debt and deficits, but yesterday’s statistics also include figures for Britain based on the methodology of the European Commission. On the same basis, the UK’s public debt is equivalent to 88.7 per cent of GDP, just below the Eurozone average, but with a significantly higher deficit, at 6.1 per cent of GDP.
The terms of the Eurozone’s fiscal compact mean that countries must aim for a budget deficit lower than three per cent of GDP, and public debt lower than 60 per cent of GDP.
Failure to meet objectives toward these goals can result in financial sanctions for members of the euro area.
Yesterday, former Federal Reserve chairman Alan Greenspan also told the BBC that he did not believe that the euro area’s economic crisis had come to an end. Greenspan commented: “Most of the people who really seriously think about this say that what Europe needs is consolidation politically, and I think that’s where we’re going.”