2020 was a disastrous year for economies worldwide. To limit damage in the form of bankruptcy and unemployment, governments resorted en masse to an old-fashioned policy form: state aid. Because the government pulled the wallet, the Dutch national debt increased by about 6 percentage points in the corona year 2020. How did that go in the rest of the eurozone?
It is well known that the corona pandemic is hitting economies worldwide hard. In many places pubs had to be closed, shop doors remained closed and travel across the border was postponed. In short, we could spend our money in fewer places, so economic activity declined.
Normally, such a drop in consumption would lead to bankruptcy and unemployment, but government entry has limited the impact of the corona crisis. For example, to keep Dutch companies afloat, NOW wage support was set up and the Fixed Cost Allowance (TVL) was created.
So the expenditure of the State increased, while on the other hand less came in in taxes because people spent less money. As a result, the Dutch national debt rose from 48.7 percent (as a percentage of GDP, ed.) At the end of 2019 to 54.5 percent at the end of 2020.
After a year of disaster, the Dutch government debt is therefore still below the EU rules that normally apply: according to those rules, countries may not have a debt higher than 60 percent of GDP. Those rules have been temporarily suspended due to the corona crisis.
Government debt (as a percentage of GDP) in the Eurozone
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Highest government debt in Southern Europe
This makes the Netherlands one of the few euro area countries that still has a national debt of less than 60 percent of GDP. Only Malta, Luxembourg, Latvia, Lithuania and Estonia are less indebted, data from the European statistics office showed on Friday Eurostat.
The highest mountains of debt can be found in Southern Europe. Greece’s public debt (205 percent of GDP) stands out in particular. The Greek economy shrank by 8.2 percent last year, partly because holidaymakers were forced to stay at home. Furthermore, the Greek public debt was already on the high side before the corona pandemic, given the consequences of the severe austerity package that resulted from the euro crisis.
In addition to the national debt of Greece, that of Italy (155 percent), Portugal (134 percent) and Spain (120 percent) is also well above the average for the euro countries. The average national debt in the eurozone was 98 percent at the end of last year, compared to a mere 84 percent at the end of 2019.
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