The debts of euro-zone governments fell in the three months to September, the first decline since the end of 2007, and an indication that the currency area may be getting on top of one of its most pressing problems.
The European Union's statistics agency said Wednesday that the combined debts of the 17 governments that were then in the euro zone fell to 92.7% of gross domestic product in the third quarter from 93.4% in the second quarter.
Their debts remained above the 90% of GDP recorded in the third quarter of 2012, and well above the 60% of GDP limit set by EU rules.
Government debt surged in the wake of the 2008 financial crisis as the economic contraction that followed hit tax revenues, while the cost of bailing out failing banks soared.
In Greece, Ireland and Portugal, debt levels surged so rapidly that investors stopped buying government bonds, and the rest of the EU and the International Monetary Fund had to step in to provide financial support.
In December, Ireland became the first of those countries to end its dependence on the EU and IMF, and start to finance itself fully on the bond markets.
Following that development, the decline in government debt levels in the third quarter will be welcomed by euro-zone policy makers as an indication that their strategy for tackling the currency area's economic problems is working, despite very high levels of unemployment and tepid growth.
As long as economic growth remains week, it will take many years for some governments in the euro zone to cut their debts to the levels that prevailed before the financial crisis.
In the third quarter, Greece's government had debts equal to 171.8% of GDP, while Ireland's debts stood at 124.8% of GDP, and Portugal's at 128.7%. In Ireland and Portugal, the ratio of debt to GDP fell in the third quarter, as it did in France, Germany and Italy.
nasdaq.com
The European Union's statistics agency said Wednesday that the combined debts of the 17 governments that were then in the euro zone fell to 92.7% of gross domestic product in the third quarter from 93.4% in the second quarter.
Their debts remained above the 90% of GDP recorded in the third quarter of 2012, and well above the 60% of GDP limit set by EU rules.
Government debt surged in the wake of the 2008 financial crisis as the economic contraction that followed hit tax revenues, while the cost of bailing out failing banks soared.
In Greece, Ireland and Portugal, debt levels surged so rapidly that investors stopped buying government bonds, and the rest of the EU and the International Monetary Fund had to step in to provide financial support.
In December, Ireland became the first of those countries to end its dependence on the EU and IMF, and start to finance itself fully on the bond markets.
Following that development, the decline in government debt levels in the third quarter will be welcomed by euro-zone policy makers as an indication that their strategy for tackling the currency area's economic problems is working, despite very high levels of unemployment and tepid growth.
As long as economic growth remains week, it will take many years for some governments in the euro zone to cut their debts to the levels that prevailed before the financial crisis.
In the third quarter, Greece's government had debts equal to 171.8% of GDP, while Ireland's debts stood at 124.8% of GDP, and Portugal's at 128.7%. In Ireland and Portugal, the ratio of debt to GDP fell in the third quarter, as it did in France, Germany and Italy.
nasdaq.com
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