The Most Indebted Countries in the EU } Debt Consolidation

 

 

When the euro was created, member countries agreed to keep their debt at 60% of GDP. However, today France reaches 97.5%. Read

 

The most indebted countries in the EU

 

The most indebted countries in the EU

 

Most European countries are heavily indebted today. Indeed, when we observe the ratio of public debt to GDP, more than half of European countries are more than 50% indebtedness. If Greece is the country with the highest ratio, its debt is “only” 240 billion. Italy, whose debt is 132% of GDP, alone accounts for more than 2,200 billion dollars. Thus, if the Greek debt is worrying, the Italian debt is still much more, because it represents almost 10 times the Greek debt.

Below, the ranking of the most indebted EU countries:

Convergence criteria

 

Convergence criteria

 

Before the establishment of the Economic and Monetary Union, which led to the creation of the Euro, the member countries of the Union agreed to respect the convergence criteria of the Maastricht agreements. Thus, they agreed to keep their public debt at a level below 60% of GDP, their public deficit at a rate below 3% of GDP, to control their rate of inflation to less than 2% per year …

These criteria were intended to contribute to the growth of the Economic and Monetary Union, while limiting the phenomenon of stowaways. Where, countries, benefit from the efforts of others, without having to do, and put at risk all countries.

But today, through this table, we see that the majority of European countries have left their public debt.

 

Debt crisis

 

Debt crisis

With the 2008 financial crisis, and the subsequent sovereign debt crisis, the single European currency has been under pressure. Thus, the European Union, the IMF and the World Bank have lent their support to countries in difficulty. These include Greece, Cyprus … Other countries such as Spain or Italy have introduced austerity measures. These measures made it possible to avoid a serious crisis in the euro zone, which in the long run could have led to its implosion.

Today, many European countries have decided to improve their public accounts, especially by trying to reduce their public deficit … France is one of these countries, and it is committed for the coming years to submit budgets including the deficit will be less than 3%.

 

Consequence of high debt

 

Consequence of high debt

 

The higher the debt of a country, the higher the debt burden. Also, the funds dedicated to the repayment of the debt, can not be affected elsewhere.

For many years, interest rates have been particularly low, so the burden of debt seems lower. However, this situation will not remain forever. In a few years, non-European countries are not immune to a rise in interest rates. And, at that time, the burden of debt will be all the more difficult to bear.

Finally, if it is normal for a country to go into debt to finance its infrastructure, contribute to investments. Too much debt is a major risk factor for the country, which could suffer a downgrade of its sovereign rating. And consequently enter a negative spiral, with an increase in the weight of the debt, difficulties to repay its creditors …

 

 

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