The entire EU public debt is falling steadily. Denmark’s finances in particular are being improved, which is also reflected in the Danish municipalities. This shows new figures from Statistics Denmark.
Statistics show, among other things, that there are marked differences in the EMU debt of the various euro area countries. Estonia is at the top with only 9.5% of GDP, while Greece is the country with the largest public debt of 179% of GDP.
EMU debt comprises a consolidated statement of significant debt items in the state, municipalities and regions. In other words: the country’s public debt.
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EU public debt
The EU countries have a total average debt of 83.5% of GDP, which, after several years of increase, has been declining since 2014 by around 3 percentage points.
Denmark has one of the absolute lowest rates in Europe in terms of EMU debt. The debt is 37.7% of GDP, which is equivalent to DKK 779bn. This makes Denmark a model example compared to countries in crisis such as Portugal, which has a debt of 130.4% of GDP, Italy with a debt of 132.6% of GDP and Greece whose EMU debt is 179% of GDP .
Denmark is thus in sixth place in relation to the lowest debt in Europe and is thus surpassed only by Estonia, Luxembourg, Bulgaria, the Czech Republic and Romania. All the above countries, Denmark included, are thus within the 60% criterion stated in the Stability and Growth Pact.
The EU’s 60% criterion
According to the Stability and Growth Pact, the general government debt limit is, under normal circumstances, 60% of GDP. This means that a country must have a maximum debt of 60% of its total GDP. Only 12 euro countries meet this requirement. These countries are marked in green on the map.
Other countries that meet the 60% criterion are Malta, Poland, Slovakia, Sweden, Lithuania, Latvia, Romania, the Czech Republic, Bulgaria, Luxembourg and Estonia.
Estonia as a pattern example
Estonia is the most successful euro zone at present. With an EMU debt of 9.5% of GDP, Estonia is the euro area with the smallest public debt. They thereby remain well below the EU’s 60% criterion. However, this is not the only point where Estonia is brilliant – in many other respects it is the EU’s dux.
In addition to the above, Estonia also meets another important criterion regarding the annual government deficit. The annual government deficit must not exceed 3% of the country’s total GDP. In 2016, the deficit for Estonia was 0.3% of GDP, with Denmark being -0.9% in comparison. Only two countries failed to meet the above criterion. Spain with -4.5% and France with -3.4% respectively.
The fact that Estonia is doing well may be due to a number of different factors. Among other things, this can be explained by the fact that the country has a much smaller economy than Denmark, for example. With a total GDP of $ 23.14 billion. Estonia’s GDP is 13 times less than Denmark’s, which stands at $ 306.1 billion. dollars.
Looking at the country’s public revenue and expenditure, it is clear that Estonia has more spending than revenue. Of this, one could wonder about the low EMU debt, but since this is a gross debt concept, only the liabilities are taken into account. Thus, the difference between assets and liabilities is not measured. Therefore, only expenses such as debt obligations and not investments are included, which may be part of the explanation for Estonia’s low debt.
If you emphasize Denmark’s net debt, you also get a completely different picture than EMU debt. Denmark’s net debt represented 6.5% of total GDP in 2016. This is a marked difference to the aforementioned 37.7% EMU debt. This is because the assets are not included in EMU debt, which means that Denmark’s deposits with Danmarks Nationalbank are not included.
Now we have looked at what the economic situation looks like at EU level, but what does the financial landscape look like in Denmark? We will answer that in the map below, which shows the Danish municipalities’ long-term debt per share. inhabitant