Europe’s debt problem is a pressing issue that has been exacerbated by the global financial crisis and the corona pandemic. The average debt level in the eurozone was 70 percent when the crisis broke out, and in 2019 it had increased to 86 percent before the outbreak of COVID-19. Currently, the figure stands at 90 percent. Even Austria, with a debt level of 78 percent, is struggling with this issue.
The ageing population is driving up costs for pensions, care, and health systems, and without countermeasures, Austria is expected to have a debt level exceeding 100% in the coming years. To address this problem, both Europe and Austria need structural reforms to create budgetary space for future challenges such as climate change, demographics, digitalization and defense.
One solution that has been proposed is a higher EU budget for cross-border projects like rail and energy networks. However, several countries have imposed stricter debt or spending brakes in recent years. While some countries make surpluses in good years like Austria did in 2018 and 2019, many others are far from meeting the Maastricht criteria – only three percent deficit allowed and maximum national debt of 60%. Rules are only as good as they are lived by politicians who must decide whether to hand out expensive election sweeteners or not.
Greece remains one of the most indebted EU countries with a ratio of over 350% of GDP while Italy has a ratio of around 145% of GDP – second only to Greece among EU’s debtor countries. France now has the third-highest debt ratio at around 125% of GDP. On the other hand, Ireland managed to reduce its debt levels significantly from over 335% to around 46%, earning it the title “Celtic Tiger.” Denmark has a low national debt at around 34%, while Estonia boasts one of the lowest national debts among all EU countries at just over
