Eurozone debt soars to record high in Q1

Crisis hit Eurozone's debt burden reached an all-time high of 92.2 per cent of gross domestic product (GDP) in the first quarter raising further concerns over the measures adopted by the European Union (EU) to rein in the continuing sovereign debt crisis and recession in the continent.

According to data released yesterday by the EU's statistical agency Eurostat, the combined government debt in the 17-member bloc that uses euro as its currency has risen 1.6 per cent in the March quarter from 90.6 per cent in the December quarter and up 4 per cent compared to 88.2 per cent in the first quarter of 2012.

For the 27-nation EU, the debt to GDP ratio increased to 85.9 per cent in the first quarter from 85.2 per cent in the December quarter, and up 2.6 per cent from last year's 83.3 per cent.

The significant increase in the debt level is expected to invite criticisms over the stringent austerity drive with spending cuts and tax increases adopted by the bloc, as they are not yielding the desired results.

Reeling under the sovereign debt crisis, a number of European countries have been forced to take remedial action to deal with their debts, some like Greece, Ireland, Portugal, Spain and Cyprus, in return for multibillion bailout packages from global lenders.

Although, some countries have been successful in bringing down their budget deficits, growth has been stalled in several economies while some are actually in recession. A combination of lower economic outputs and budget deficits cause higher debt to GDP ratios.

Advocates of austerity believe that the eurozone recession, which has lasted since the end of 2011, may come to an end later this year.

In last week's meeting of the finance ministers and central bank chiefs of the Group of 20 major economies (G20) including the European Union, officials affirmed that the ''near-term priority is to boost jobs and growth.'' 

Greece, the first country that was bailed out by the EU and the IMF, has the highest debt level of 160.5 per cent of the GDP, followed by Italy with 130.3 per cent, Portugal with 127.2 per cent and Ireland with 125.1 per cent.

The lowest debt level in the eurozone has been registered by Estonia with 10 per cent followed by Bulgaria and Luxembourg with 18 per cent and 22.4 per cent respectively.

Compared with the December quarter, Ireland's debt ratio increased the maximum with 7.7 per cent, followed by Belgium 4.7 per cent and Spain 4 percent.

The debt level of Germany, Europe's largest economy, has reduced by 0.7 per cent in the first quarter. Debt ratio of Latvia and Denmark also reduced by 1.5 per cent and 0.8 per cent respectively.

Total debt of the eurozone stood at €8.75 trillion as at the end of the first quarter, 5 per cent higher than the total debt of €8.34 trillion a year ago.

For the larger EU, the debt burden stood at €11.11 trillion up 4 per cent from last year's €10.67 trillion.