Eurozone government debt still growing despite lower deficits

Julian Harris
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LEVELS of government debt across the Eurozone climbed to another record high last year, according to data published by Brussels’ statistics office yesterday.

While the size of deficits shrank, most governments still continued to load billions onto their debt piles.

Debt climbed to 87.3 per cent of GDP across the euro area, up from 85.4 per cent in 2010, and 70.2 per cent back in 2008.

The size of Eurozone states’ deficits eased slightly to a collective level of 4.1 per cent of GDP, from 6.2 per cent in 2010 – yet this still meant an extra €390.7bn (£318.8bn) government debt.

Across the wider European Union area, only six states saw their level of debt as a percentage of GDP fall from 2010 to 2011, while 21 saw it worsen.

Despite chancellor George Osborne pledging a slowdown in government spending, the UK’s deficit remained one of the largest in Europe.

Only Ireland (13.4 per cent of GDP), Greece and Spain (both 9.4 per cent of GDP) recorded a larger annual deficit that the UK (7.8 per cent of GDP).

Back in the Eurozone, powerhouse economy Germany, slashed its budget deficit to 0.8 per cent of GDP in 2011 from 4.1 per cent in 2010 and its debt fell to 80.5 per cent of GDP from 82.5 per cent.

And EU members Sweden, Hungary and Estonia managed to buck the trend and record budget surpluses in 2011, despite the ongoing economic slump across most of the continent.