European Economic Perspectives "Eurozone: Public debt rising again" Cluse

Research evidence excerpt

European Economic Perspectives "Eurozone: Public debt rising again" Cluse

Box 1: Eurozone government debt – two definitions

To calculate outstanding debt by sector (governments, households, non-financial corporates, and financial institutions), we

predominantly use Eurostat's quarterly financial balance sheet data (EQFBS), specifically loans and debt securities. As regards

the public sector, these calculations suggest that in Q4-25 Eurozone government debt amounted to 92% of GDP (essentially

unchanged from 92.2% in Q4-24). This is above the 87.9% (+0.8pp from Q4-24) reported by Eurostat's quarterly

government debt data (EUSGP), which follows the European System of Accounts (ESA 2010) and is the basis for the EU's

Excessive Deficit Procedure (EDP).

EQFBS and EUSGP differ mainly for two reasons:

1. Government debt for EDP purposes (EUSGP) is recorded at nominal value while financial balance sheet data (EQFBS) is

recorded at market prices; this can create a discrepancy between the two measures when market interest rates, and hence

bond prices, are subject to significant change.

2. Government debt for EDP purposes (EUSGP) is consolidated between and within the sectors of general government, while

financial balance sheet data (EQFBS) is unconsolidated and might therefore lead to some double-counting, as debt between

government sectors might not be netted out. For this reason, we regard the debt data for EDP purposes (EUSGP) as

the more accurate measure; it is also the more important measure from a political and economic policy perspective.

See Figures 1-3; see also section 8.2 in Eurostat's Manual on Government Deficit and Debt.

Figure 1: Eurozone government debt (€bn) according to Figure 2: Eurozone government debt (% of GDP)

EQFBS and EUSGP according to EQFBS and EUSGP