Eurozone’s debt rises in first quarter, set to peak this year

It is time for the European Central Bank to cancel a large of the public debt it holds, say over a hundred economists from across Europe including Aurore Lalucq, Nicolas Dufrêne, Jézabel Couppey-Soubeyran and Laurence Scialom.

Eurozone public debt rose to 93.9% of economic output in the first quarter of this year, approaching the peak it is expected to reach later in 2014, official data showed on Tuesday (22 July).

Government debt of the 18 countries sharing the euro stood at €9.055 trillion euros in the first three months of this year, compared to €8.905 trillion in the last quarter of 2013, the EU’s statistics office Eurostat said.

The EU’s executive arm – the European Commission – expects the debt to peak at 96% of gross domestic product this year and then ease to 95.4% of GDP in 2015.

Nearly 80% of the bloc’s debt is in bonds and treasury bills. Loans account for 17.9% of the debt.

Twice bailed-out Greece was the euro zone’s most indebted country with sovereign debt of 174.1% of GDP, followed by the bloc’s third-biggest economy Italy, with debt equivalent to 135.6% of GDP in the first quarter.

Only two countries – Germany and Luxembourg – saw their debt fall compared with the last quarter of 2014 and the first quarter of 2013.

In the full 28-member EU, total debt rose to 88% from 87.2%, Eurostat said. Debt had fallen in both the third and fourth quarters of last year as the economy recovered slowly from a deep recession, boosting government revenues, as spending was kept under control.

On that basis, some countries such as twice-bailed out Greece and struggling France, have called for an easing of the austerity policies adopted to tame the crisis.

Among those with the highest total debt levels were Greece, on 174.1% of its annual output, Italy with 135.6% and Portugal, on 132.9%.

The best performers were Estonia with 10%, and Bulgaria, scoring 20.3%.

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