1. Home
  2. Studies
  3. How is Public Debt Developing in the Southern EU Member States?
Björn Kauder IW-Trends No. 4 31. December 2021 How is Public Debt Developing in the Southern EU Member States?

Especially in Southern Europe, public debt is missing the targets of the European Stability and Growth Pact by wide margins, leading to concern about the sustainability of public finances.

Download PDF
How is Public Debt Developing in the Southern EU Member States?
Björn Kauder IW-Trends No. 4 31. December 2021

How is Public Debt Developing in the Southern EU Member States?

Download PDF Quote

Copy the information

The link was added to your clipboard!

Share this article:

or copy the following link:

The link was added to your clipboard!

German Economic Institute (IW) German Economic Institute (IW)

Especially in Southern Europe, public debt is missing the targets of the European Stability and Growth Pact by wide margins, leading to concern about the sustainability of public finances.

The present article examines the possible further development of government debt ratios in France and the four southern European EU member states Greece, Italy, Portugal and Spain. Three scenarios are developed for the next 20 years. One continues the values forecast by the IMF for the year 2026. The second and third scenarios are based respectively on the development in the four- and eight-year periods before the onset of the Covid19 pandemic. The results show that only Portugal and Greece can realistically be expected to reduce their debt ratios in the next two decades. Both EU Member States have remarkable primary balances. Moreover, the Portuguese economy is developing handsomely while Greece is benefitting from relatively low interest rates. However, not even Portugal is within reach of reducing its debt to the 60 per cent of GDP envisaged by the Stability and Growth Pact. For France, Italy and Spain, a further increase in debt ratios is to be expected. This is due not least to the weakness of the French and Spanish primary balances, while Italy continues to suffer from a sluggish economy. The sustainability of national budgets thus remains a perennial political and economic challenge – especially in view of the demographic adjustments these countries face.

Content element with id 10395
Download PDF
How is Public Debt Developing in the Southern EU Member States?
Björn Kauder IW-Trends No. 4 31. December 2021

How is Public Debt Developing in the Southern EU Member States?

Download PDF Quote

Copy the information

The link was added to your clipboard!

German Economic Institute (IW) German Economic Institute (IW)

Share this article:

or copy the following link:

The link was added to your clipboard!

More on the topic

Read the article
Jan Büchel / Barbara Engels in European Liberal Forum External Publication 4. July 2022

The Importance of the Data Economy for Europe’s Digital Strategic Autonomy

European companies need to have the ability to store, process, use, and share data securely and autonomously, for example by using cloud services based on agreed quality standards, values, and legislation.

IW

Read the article
Hubertus Bardt / Klaus-Heiner Röhl / Christian Rusche in The Economists' Voice External Publication 21. June 2022

Subsidizing Semiconductor Production for a Strategically Autonomous European Union?

The COVID-19 pandemic has highlighted the vulnerability of international supply chains and the dependency of the economy of the European Union (EU) on goods from non-EU countries. The scarcity of microchips that has persisted since the COVID lockdowns has laid ...

IW

More about this topic

Content element with id 8880 Content element with id 9713