The eurozone’s average debt level has steadily increased since the global financial crisis in 2008. In 2019, before the outbreak of the coronavirus pandemic, it was already at 86 percent. However, this figure has now risen to 90 percent, highlighting a significant debt problem in Europe. According to economist Hanno Lorenz from Agenda Austria, the European Central Bank holds a quarter of all debt from the low-interest rate phase. When the sale of these bonds begins, states will have to take on new debt on much less favorable terms, exacerbating the debt problem.
Despite having a relatively lower debt level of 78 percent compared to other countries in Europe, Austria also faces challenges due to an aging population that is driving up costs in areas such as pensions, care and health systems. Without reforms, Austria is expected to see its debt level rise above 100% in the coming years. Margit Schratzenstaller from WIFO emphasizes the need for structural reforms in both Europe and Austria to create budgetary flexibility for future challenges.
Several countries in Europe have implemented stricter debt or spending brakes in recent years with the aim of generating surpluses during good years. However many eurozone countries are still far from meeting Maastricht criteria of maximum national debt of 60% and deficit of only three percent. Countries like Greece, Italy and France are struggling with high levels of debts while economic challenges that impact whole Eurozone region.
On a positive note, some countries like Ireland have managed their debts more effectively through aggressive tax policies that attracted high-tech companies leading to significant decrease in debts levels. Denmark maintained low debt levels through budget surpluses and strict control over public spending while Estonia faced challenges from war in Ukraine but still managed to keep its debt levels among lowest EU through sound fiscal policies.
In conclusion, different approaches towards managing debts among European countries highlight importance of strategic reforms and responsible financial management by governments to tackle their respective
