FX.co ★ 5 heavily indebted EU countries

Italy

The most troublesome country nowadays is Italy. Indeed, its economy accounts for more than 12% of the EU GDP which is almost 10 times as big as the share of Greece. According to the latest estimates, Italy’s public debt exceeds its GDP by 150%. It amounts to €2.77 trillion. Italy’s sovereign debt has been swelling for the following reasons: the euro’s protracted weakness, high consumer inflation, and a jump in government bonds’ yields on the back of political jitters and mounting recession fears.

Greece

To tackle the fallout from the crisis, the EU lending institutions tightened the supervision mechanism for the Greek economy in 2010. The EU authorities released the Balkan country from financial supervision only this year. Nevertheless, economists voice concern that Greece might repeat the 12-year-old scenario and again find itself incapable of paying off its external debt.

Spain

Spain’s public debt has been multiplying at an exponential rate. Nowadays, it has expanded to 118% of the country’s GDP and totals €1.45 trillion. Spain’s sovereign debt piled up during the COVID pandemic. The country’s GDP accounts for more than 8% of the EU's overall GDP. Until now, the Kingdom has not been able to recover in full after a series of lockdowns. Restrictions imposed at the peak of the coronavirus pandemic considerably eroded budget revenues.

Hungary

This country in Central Europe encountered serious economic snags not long ago. Until the second half of 2021, Hungary had a budget proficit. As of now, the ratio of the budget deficit to GDP has increased to 6.8%. Another headwind is rampant inflation which has recently topped 13% in annual terms. On the back of the contraction in the national economic output and soaring headline inflation, the government had to pump up its budget spending. For the time being, Hungary’s sovereign debt amounts to 77% of its GDP.

Portugal

Until recently, Portugal’s economy looked decent compared to some other ailing European economies. However, the country was hurt by the largest in-10-years capital outflow. Spooked by a slowdown in economic growth, investors rushed to transfer their capital to more reliable economies, for example, Germany. The capital flight triggered a sharp increase in Portugal’s trade balance deficit to nearly 3%. The public debt swelled to 127% of the GDP. The debt now equals €1.45 trillion.