Government Q2 debt-GDP ratio sees largest EU spike

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Cyprus’ general government gross debt-to-GDP ratio increased by 2.2 percentage points (pp) to 85.3% in the second quarter of 2023, compared with the previous three months, the largest quarterly increase by an EU state.

Compared to Q2 2022, the ratio decreased by 8.1 pp (the third largest drop in the EU), according to Eurostat.

This ratio stood at 90.3% in the eurozone at the end of Q2 2023, compared with 90.7% in Q1 2023. The ratio in the EU decreased from 83.4% to 83.1%.

For both the eurozone and the EU, the decrease in government debt to GDP ratio is because an increase in GDP in absolute terms outweighed the increase in government debt.

Compared with Q2 2022, the government debt to GDP ratio decreased in the eurozone (from 93.5% to 90.3%) and the EU (from 85.9% to 83.1%).

Among the member states, the highest ratios of government debt to GDP in Q2 2023 were recorded in Greece (166.5%), Italy (142.4%), France (111.9%), Spain (111.2%), Portugal (110.1%) and Belgium (106.0%).

The lowest were in Estonia (18.5%), Bulgaria (21.5%), Luxembourg (28.2%), Denmark (30.2%) and Sweden (30.7%).

Compared with Q1 2023, nine member states registered an increase in their debt to GDP ratio in Q2 2023 and 18 a decrease.

The largest increases in the ratio were observed in Cyprus (+2.2 percentage points – pp), Slovakia (+1.6 pp), Italy (+1.5 pp), Finland and Estonia (both +1.3 pp).

And the largest decreases were in Latvia (-3.5 pp), Croatia (-2.6 pp), Portugal (-2.2 pp), Greece (-2.1 pp), Malta (-1.7 pp), Austria (-1.6 pp), Slovenia (-1.5 pp), the Netherlands (-1.4 pp), Germany (-1.1 pp) and Sweden (-1.0 pp).

Compared with Q2 2022, six member states registered an increase in their debt-to-GDP ratio in Q2 2023, and 21 member states decreased.

Increases in the annual ratio were recorded in Luxembourg (+2.9 pp), Finland (+2.1 pp), Estonia (+1.6 pp), Czechia (+0.8 pp), Slovakia (+0.4 pp) and Bulgaria (+0.2 pp).

The largest decreases were observed in Greece (-16.6 pp), Portugal (-11.8 pp), Cyprus (-8.1 pp), Ireland (-7.4 pp), Croatia (-6.0 pp), Slovenia (-4.5 pp), Austria and Italy (both -4.0 pp), Spain (-3.3 pp) and the Netherlands (-3.1 pp).

Debt securities accounted for 83.4% of the eurozone and 82.9% of EU general government debt.

Loans comprised 13.8% and 14.3%, respectively; currency and deposits represented 2.8% of the euro area and 2.7% of EU government debt.