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Irish debt at 117pc of GDP in Q3

Wednesday, January 23 12:28:54

Public debt in Ireland reached 117pc of economic output in the third quarter of last year behind Greece, whose debt rose to 153pc of GDP, latest EU statistics show.

Public debt levels in the euro zone neared their projected peak last year after more than a decade of huge borrowing, but data also highlighted a divide between the richer north and Mediterranean countries where the burden is still growing.

Government debt stabilised at 90 percent of economic output in the 17 nations sharing the euro in the third quarter, barely changed from 89.9 percent in the second, the EU's statistics office Eurostat said on Wednesday.

With public debt expected to peak at 94.5 percent in all of 2013, according to European Commission forecasts, the stabilisation is another sign the euro zone has a chance to emerge from a banking and debt crisis that nearly destroyed it.

But while the Commission expects debt to start falling from 2014, it is still above the 90 percent level that economists consider damaging for growth.

It is also well above the EU's limits for a healthy economy and will take decades to pay down.

Europe's debts soared from the EU-mandated limits of 60 percent of gross domestic product following the introduction of the euro in 1999, as countries from Spain to Ireland indulged in massive borrowing at very low rates of interest.

A divide now exists between France and Germany on the one hand, where debt fell slightly in the third quarter from the second, and the economies of Ireland, Greece, Portugal, Spain and Italy, whose debt-to-GDP ratio rose in the July-September period.

Debt in Ireland, where a burst real estate bubble forced the country into an international bailout, reached 117 percent of economic output in the quarter, while the number was 127 percent in Italy. Spain saw its burden tick up to 77 percent of GDP, and the Commission sees it reaching 97 percent in 2014.

Greece's debt rose to 153 percent of GDP in the quarter and will reach 189 percent in 2014, although a deal struck by euro zone finance ministers and the International Monetary Fund in November aims to take it down to 124 percent by 2020. (C ) Reuters