Bloomberg News

Euro-Area Debt Rises to Highest Since Single Currency Began

July 23, 2012

Euro-area governments’ debt burden increased in the first quarter to the highest since the single currency began as nations battled the fiscal crisis.

Government debt as a percentage of gross domestic product rose to 88.2 percent from 87.3 percent in the fourth quarter, the European Union’s statistics office in Luxembourg said today. That’s the highest since the euro was introduced in 1999.

Greece reported the largest debt on the list at 132.4 percent of GDP, down from 165.3 percent in the prior quarter after the nation’s bond-swap operation. Italy was second-highest with debt of 123.3 percent of GDP, up from 120.1 percent in the fourth quarter, while Spain saw an increase to 72.1 percent from 68.5 percent.

Uncertainty among investors about countries’ ability to repay debt has pushed up bond yields in the single-currency bloc and five euro countries have sought international bailouts. Greece’s troika of international creditors -- the European Commission, the European Central Bank and the International Monetary Fund -- travel to Athens tomorrow amid doubts that the government will meet its bailout commitments and reluctance among euro nations to put up more funds should it fail.

The euro fell below its lifetime average against the U.S. dollar and to the lowest level in more than 11 years against the yen today. The European currency traded at $1.2108 at 11:44 a.m. in Frankfurt, down 0.4 percent on the day.

Debt ratios climbed in 15 of the 17 euro-area nations in the first quarter, dropping only in Finland and Greece, which pushed through the biggest sovereign-debt restructuring in history in the first quarter. Estonia had the lowest debt level, at 6.6 percent of economic output.

To contact the reporter on this story: Jana Randow in Frankfurt at jrandow@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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