- Obama hosting annual Easter Egg Roll
- Big Bang a big question for most Americans: Poll
- Jimmy Carter’s grandson: People have right to sport Confederate battle flag license plate
- Supreme Court issues no ruling on case challenging N.J. gun law
- Sharyl Attkisson: Media Matters ‘clearly targeted me’
- Sherpas consider boycott after Everest avalanche
- Democrat Rep. Stephen Lynch on Obamacare: ‘We will lose seats’ this November
- Syria to hold presidential election on June 3
- People will be safe at 118th Boston Marathon, Mayor Marty Walsh says
- Boy Scout, 12, killed by rolling tree during troop outing at Washington park
Eurozone debt hits 90% of economy
Five countries in recession; business activity drops
LONDON — In spite of years of harsh spending cuts and tax increases, Europe’s debt problems are getting worse.
The European Union’s statistics office, Eurostat, reported Wednesday that, at the end of the second quarter, the total government debt of the 17 countries that use the euro was worth 90 percent of the group’s total economic output for the year. That is the highest level since the euro was launched in 1999.
The rise from the previous quarter’s debt-to-GDP ratio of 88.2 percent, and the previous year’s equivalent of 87.1 percent, is a result of the eurozone’s economic problems – which are making it harder for countries to handle their debts.
“The euro-area economy remains stuck in a rut,” said James Ashley, senior European economist at RBC Capital Markets.
According to Eurostat, five of the countries that use the euro are in recession – Greece, Spain, Italy, Portugal and Cyprus.
Many analysts expect the eurozone to slip back into recession in the third quarter of the year, when official figures are published next month. A recession is technically defined as two quarters of negative growth in a row.
Other figures Wednesday pointed to a deepening economic crisis in the eurozone.
The purchasing managers’ index – a gauge of business activity – from financial information company Markit fell from the previous month’s 46.1 to 45.8 in October – its lowest level in more than three years. Any figure below 50 indicates a contraction in activity.
Meanwhile, a closely watched survey from the economic research group Ifo Institute found that business confidence in Germany, Europe’s biggest economy, dropped for the sixth month in a row, confounding expectations of a modest increase.
Ifo’s key figure for October dropped to 100, from 101.4 in September.
Germany has been the main reason why the eurozone has not fallen into recession.
The country’s powerhouse exporters, such as Volkswagen and BMW, have taken a slice of rising trade volumes around the world while its consumers have shown an increasing appetite to spend.
But Germany’s economy recently has lost its momentum as the debt troubles on its doorstep have weighed on economic confidence.
A shrinking economy makes the value of a country’s debt as a proportion of the size of its economy worse.
For example, Italy’s debt burden has risen from 123.7 percent in the first quarter to 126.1 percent in the second quarter, while its economy has shrunk for four straight quarters.
TWT Video Picks
Women losing coverage under Obamacare, too
- Tactical advantage: Russian military shows off impressive new gear
- USAID documents cite Hillary Clinton in chaos of Afghan aid
- Twitter blocks accounts critical of Turkish government
- Former Ranger breaks silence on Pat Tillman death: I may have killed him
- Scalia to students on high taxes: At a certain point, 'perhaps you should revolt'
- Special Forces' suicide rates hit record levels casualties of 'hard combat'
- Jimmy Carter's grandson: People have right to sport Confederate battle flag license plate
- Feds approve powdered alcohol; 'Palcohol' available later this year
- America is an oligarchy, not a democracy or republic, university study finds
- CURL: Shelly O first lady Michelle Obama comes in last
Top 10 handguns in the U.S.