Catalina Espinosa
Research expert covering society, economy, and politics for Europe and the EU
Government finances in the European Union - statistics & facts
The European Union is founded on the basis of economic cooperation between member states, however, the role which government debt and expenditure plays in the EU has long been contested. Since the establishment of the EU in its current form with the Maastricht Treaty of 1992, member states have been bound by rules regarding government debt and deficits, with deficits limited to three percent of national GDP annually and the total national debt burden limited to 60 percent of GDP. These rules were put in place to spur the economic convergence which would allow for the Euro currency to be introduced, as member states needed to have relatively similar inflation and yields on government debt to join the currency union. While initially this proved successful, with countries using the Euro seeing their interest rates on borrowing converge, the outbreak of the Eurozone debt crisis in the early 2010s brought the issue of debt and expenditure back into the spotlight. The EU's government debt-to-GDP ratio rose from 62 percent in 2007, to 87 percent in 2014, with a further spike to 90 percent in 2020 due to the coronavirus pandemic.
