Is European public debt still a Sword of Damocles?
Although eurozone public debt levels have fallen in the past five years, they remain high in certain northern European countries and across much of southern Europe (Greece: 175% of GDP; Italy: 134%; Portugal: 119%; Spain: 96%; and France: 99%).
Since the European debt crisis, Member States have set firewalls up to limit the risk of dislocation, although speculative attacks remain still possible in the event of economic and/or political shocks. These firewalls include the European Stability Mechanism (ESM), which can act as lender of last resort, and the Outright Monetary Transactions (OMT) programme, which enables the European Central Bank to make potentially unlimited purchases of sovereign debt on the secondary market.
The opinion expressed above is dated 6 December 2019, and liable to change.
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