Map of European Debt Crisis

Debts Have Been Rising to Dangerously High in the Past Decade

February 28, 2012

In the past decade the debts of the European Union (E.U.) countries have been rising to dangerously high level causing the current Europe's debt crisis. Greece and Italy have had high levels of debt since 2000. Now Greece and Italy are not the only countries in Europe with credit and debt problem. More than a half of the E.U. countries carry debts exceed the European Commission limit, which is 60 percent of gross domestic product (G.D.P.).

The European Union is made up of 27 countries, with one of the chief goals being to create a single market and integrate economies through shared regulations. Overseeing the E.U. is the European Commission, based in Brussels. Within the European Union are 17 countries that use the Euro as a common currency. This collective group of countries which use the Euro is called Eurozone.

European Union (E.U.) and euro zone countries
Source: The New York Times

Greece’s debt problems are not new. The country had high levels of debt, which are measured by debt as percentage of G.D.P., even as it prepared to join the euro zone in 2000. Italy and Belgium, too, have long wrestled with large debt loads. The debt-to-G.D.P. ratios of Greece and Italy have been dangerously high, which are 109% and 103% respectively, since 2000.

Rising spending on the social safety net and other government programs has increased sharply over the last decade, pushing debt levels higher across the continent. Britain’s government spending as a percentage of G.D.P. hit a 10-year high in 2008. The debt-to-G.D.P. of Italy was 106% in 2005, while Greece was 100%.

Greece’s debt troubles are not unique. In 2011, fourteen of the 27 European Union countries face debts equal to more than 60 percent of their gross domestic product, the limit set by the European Commission. 

In 2011 Greece, Italy, Portugal, and Ireland carry the highest debt burden with debt-to-G.D.P. ratio above 100%. These four countries are members of Eurozone. 

The second highest debt level group with the ratio between 75% and 100% includes some of the region’s biggest economies, such as Britain, France, and Germany.

Europe Debt Crisis: 2011 E.U. debt as a percentage of GDP
Source: The New York Times