Government debt in the euro area surged to the highest levels since the introduction of the single currency, underscoring the challenges still confronting the 19-nation bloc as it wrestles with Greece over new aid payments.
Greece’s debt pile swelled to a new high of 177.1 percent of gross domestic product at the end of 2014, up from 175 percent a year earlier, the European Union’s statistics office in Luxembourg said today. For the euro zone as a whole, government debt rose to a record 91.9 percent of GDP last year from 90.9 percent in 2013.
The figures give added impetus to European leaders’ demands that Greece revamp its economy before receiving further bailout support. While progress will to be reviewed on April 24 when ministers from the currency bloc meet in Riga, Latvia, European Commission Vice President Valdis Dombrovskis said in an interview in Washington that creditors might need to wait until mid-May to see what Greece can deliver.
“Nobody is optimistic, frankly speaking on Greece,” former European Central Bank President Jean-Claude Trichet said in an interview in Singapore on Tuesday. “All depends on the maturing of the position of the Greek government understanding that in any case if it wants to deliver growth and jobs, which is the main goal of the government, it has to produce a recovery program that inspires confidence to the international community.”
The figures show that Greece’s debt level is up about 25 percentage points from 156.9 percent in 2012, the year the country received its second bailout, of 130 billion euros ($139 billion), from the EU and International Monetary Fund.
Today’s data also confirmed that other fragile euro-area economies are still struggling to control debt levels even as recovery across the currency region gathers pace. Italy’s debt mountain increased and remained as the second-highest in the euro area after Greece, going up to 132.1 percent of GDP in 2014 from 128.5 percent the previous year.
Portugal, in third place, saw its debt rise to 130.2 percent of GDP from 129.7 percent, while in Ireland, next in line, debt fell to 109.7 percent from 123.2 percent. Both countries received international bailouts at the height of the euro crisis.
The data also show that some euro-area countries are struggling to reduce their budget deficits to within the EU’s 3 percent of GDP limit. France, the region’s second-biggest economy, posted a deficit of 4 percent in 2014, down from 4.1 percent. Cyprus had the widest deficit, at 8.8 percent of GDP while Spain recorded a deficit of 5.8 percent, narrowing from 6.8 percent the year before. Greece posted a deficit of 3.5 percent.