The return to a normal fiscal situation, that is, to the average nominal growth and the primary balance recorded during the 2000-2019 period, will not occur in the same way in the main European economies, and in the case of Spain it would not return to the Debt levels prior to Covid-19 up to 89 years from now , according to Euler Hermes experts in a study.
In comparison with other EU countries , while Germany would debt levels prior to the Covid-19 in 2028, other heavyweights in the eurozone would need much longer: Italy 26 and France 67 years.
Faced with the Covid-19 crisis, European governments quickly decided to back households and businesses with unprecedented political support, leading to a notable deterioration in public finances across the eurozone in 2020.
Faced with this situation, the panorama of European public debt has never been so heterogeneous at the country level. And it is that seven of them ( Greece , Italy, Portugal , Spain, Cyprus , France and Belgium , which together represent more than 50% of the GDP of the euro area) currently have a debt / GDP ratio close to or greater than 120% of GDP ie double the Maastricht debt target.
As the report indicates, over-indebtedness from Covid-19 will prove tricky: In 2021-22, the eurozone’s debt-to-GDP ratio should largely stabilize at around 100% as deficits remain large.
Spain Will Take 89 Years To Return To Public Debt Before The Pandemic,
“But what happens after 2022 is anyone’s guess, since it depends on a compleja combinación de variables”, han alertado los expertos tras asegurar que a menos que los grandes países de la eurozona, incluyendo a Francia, España e Italia, registren aumentos notables en el crecimiento del PIB nominal y/o mejoren los saldos primarios, el retorno a los niveles de deuda en relación con el PIB anteriores a la crisis no se producirá antes de 2035.
Thus, the Covid-19 shock will have a long-term impact on the regions’ public finances, not only in the form of persistent over-indebtedness, but also in the reinforcement of a paradigm shift with regard to debt concepts. public and fiscal policy.
For experts, an “active fiscal policy” is the only alternative and the planning horizon is becoming increasingly in the long term “a common anchor” to guarantee the soundness of fiscal policies and, in turn, the sustainability of Debt.
