Public debts of Ireland and the Netherlands rise rapidly

Public debt in the Netherlands grew by 87 billion euro to 346 billion euro last year. Government debt as a percentage of GDP has increased by 12.6 percentage points and amply exceeds the EU average of 2.8 percentage points. The Irish national debt also grew considerably. The Irish and Dutch national governments conducted massive bailout operations in the latter half of last year.

Growth public debt, 2008

Still within the limit, but only just

As a result of the growing deficit, the Netherlands’ total public debt jumped to 58.2 percent of GDP, which is still below the EU average and only just within the 60 percent limit EU member states have agreed in the Stability and Growth Pact.

Government deficit/surplus Netherlands and EU

After four years of decline, deficits are growing

After four years of decline, public deficits in the EU member states are growing again. The EU average deteriorated from 0.8 percent of GDP in 2007 to 2.3 percent in 2008. A striking reverse trend is observed in the Netherlands, where government balance sheet improved further in 2008. The government balance sheet also improved in Hungary, Bulgaria and, to a lesser degree in Germany and Austria. Government deficits in Ireland, the United Kingdom, Romania, Greece, Malta, Latvia, Poland, Spain, Hungary, France and Lithuania exceeded the 3 percent European limit.

Despite a growing public debt, the Netherlands could realise a surplus, because the effect of the bailout operations is neutral since the growing national debt is offset by an increase the government’s financial assets, e.g. shares and outstanding loans.

Change government balance sheet, 2008

Floris Jansen

Source: Eurostat