Total EU government debt has smashed past the €10 trillion mark, the big four audit group says, with the UK still in an unhealthy position.
“At a time of slow growth and steadily ageing populations, this [level of state debt across the EU] is a major concern,” the report warns.
Ranking European countries with a traffic light system, the UK is given a red light for the size of its annual public deficit – as a percentage of GDP – as well as for the level of private household debt, also as a percentage of GDP.
“The UK does not have the worst public debt position but it is particularly exposed to possible household deleveraging – more so than any other EU country than Greece according to our analysis,” PwC said.
Chancellor George Osborne had planned to eliminate the annual deficit by the end of the current parliament, yet is still piling over £100bn each year onto the national debt, which stand in excess of £1 trillion.
“The UK has... a budget deficit that has fallen since 2010, but still has a long way further to go before it reaches sustainable levels,” the report said.
And Britain’s position is vulnerable given the ongoing debt crisis in the nearby euro area. “The UK may not be in the Eurozone but it is far from immune from its problems given that around 40 per cent of UK exports go the Eurozone, even though this ratio is in gradual long term decline.”
France also fared poorly in the analysis, attracting red lights for the size of its government debt, and its high unit labour costs.