Debt at record high in Europe

Government debt in the eurozone has 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% of GDP at the end of 2014, up from 175% a year earlier, the European Union’s statistics office in Luxembourg said yesterday. For the eurozone as a whole, government debt rose to a record 91.9% of GDP last year from 90.9% 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 Friday, when ministers from the currency bloc meet in Riga, Latvia, European Commission Vice President Valdis Dombrovskis said in an interview in Washington DC, 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 yesterday.

“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 programme that inspires confidence to the international community.”

The figures show that Greece’s debt level was up about 25 percentage points from 156.9% in 2012, the year the country received its second bailout, of €130bn, from the EU and IMF.

The latest data also confirmed that other fragile euro-area economies arestruggling to control debt levels even as recovery gathers pace.

Italy’s debt mountain increased and remained as the second-highest in the euro area after Greece, going up to 132.1% of GDP in 2014 from 128.5% the previous year.

Portugal, in third place, saw its debt rise to 130.2% of GDP from 129.7%, while in Ireland, next in line, debt fell to 109.7% from 123.2%. The data also show that some euro-area countries are struggling to reduce their budget deficits to within the EU’s 3% of GDP limit.

France, the region’s second-biggest economy, posted a deficit of 4% in 2014, down from 4.1%. Cyprus had the widest deficit, at 8.8% of GDP while Spain recorded a deficit of 5.8%, narrowing from 6.8% the year before. Greece posted a deficit of 3.5%.

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