Continuous support for recovery raised public debt of the EU and eurozone in the second quarter

The mitigation of the pandemic’s effects required strong state support in the EU and eurozone in the second quarter, and public debt expressed as a share of GDP increased on an annual basis despite the economic recovery, according to a report by Eurostat.

Governments in EU countries further increased their borrowing in the second quarter to alleviate the consequences of the pandemic crisis on society and the economy and to support recovery, which was reflected in the increase of public debt expressed as a share of GDP, despite the growth in activity.

At the EU level, public debt expressed as a share of GDP in the second quarter amounted to 90.9 percent, which was 3.7 percentage points higher than in the same period last year, as determined by the European statistical office.

In the eurozone, it increased by 3.9 percentage points to 98.3 percent.

In comparison to the first quarter of this year, the continuous recovery of economic activities from the corona crisis is reflected, so the share of public debt in the EU’s GDP decreased by 1.5 percentage points.

In the eurozone, it fell by 1.6 percentage points, according to Eurostat’s report.

Croatia alongside Austria 

Among EU countries, Greece recorded the highest share of public debt expressed as a share of GDP at the end of the second quarter, where it was twice the GDP.

In Italy, it was 56 percent higher than GDP, in Portugal 35 percent, and in Spain 22.8 percent.

France also recorded debt higher than GDP, by 14.6 percent, Belgium by 13 percent, and Cyprus by 12 percent.

In Croatia, the consolidated general government debt at the end of June amounted to 340.8 billion kuna, which corresponded to 87.5 percent of GDP. At the end of March, it amounted to 340.5 billion kuna, which corresponded to 91.5 percent of GDP.

At the end of last June, it amounted to 329.7 billion kuna, which corresponded to 84.6 percent of GDP. 

Austria was closest to Croatia in terms of the share of debt in GDP at the end of the second quarter of this year, where it amounted to 86.2 percent.  

Estonia recorded the lowest level of public debt expressed as a share of GDP at the end of June, at 19.6 percent. Bulgaria and Luxembourg followed, where it amounted to approximately a quarter of GDP.

Most continue to help

New waves of infection and the deep consequences of the pandemic require continuous government support, which was also reflected in the data that the share of public debt in GDP at the end of the second quarter in 24 EU countries was higher than in the same period last year.

It increased the most in Greece, by 15.9 percentage points, followed by Spain and Malta with increases of 12.5 and 10.8 percentage points, respectively.

Croatia, with an increase in the share of public debt in GDP at the end of the second quarter by 2.9 percentage points compared to the same period last year, is in company with Poland and the Czech Republic, where it increased by 2.8 and 3.2 percentage points, respectively.

Germany is also close with an increase in the share of debt in GDP on an annual basis by 3.3 percentage points. 

The smallest increase was in Finland and Belgium, by half and 0.6 percentage points, respectively.

Only Ireland, with a decrease of 3.1 percentage points, Denmark, with a decrease of 1.5 percentage points, and the Netherlands, with a decrease of 0.8 percentage points, recorded lower public debt expressed as a share of GDP compared to the end of last year’s second quarter, according to Eurostat’s report.

Signs of recovery

The accelerated recovery of the economy this year was reflected in the reduced share of debt in GDP in 23 EU countries at the end of June compared to the end of March.

The largest decrease was in Cyprus, by 9.4 percentage points. 

Slovenia and Croatia followed with a decrease in the share of public debt expressed as a share of GDP by five and four percentage points, respectively. Portugal is also close, where it decreased by 3.7 percentage points.

Malta and Slovakia recorded a higher share of public debt in GDP at the end of June compared to the end of March, by two and 1.3 percentage points, respectively, while in Bulgaria and Estonia it remained unchanged.