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Daniel Kral at Oxford Economics has looked at the fiscal cost of the pandemic across different economies in the eurozone.
Data this week revealed that for the most indebted countries, the surge was mainly driven by a collapse in economic activity. For governments entering the pandemic with relatively low public debts, fiscal support measures were the main driver. Kral adds:
Governments can live with high public debt, subject to continued favourable interest rate and nominal growth dynamics. But the uneven fiscal response risks fuelling further economic divergence within the eurozone, although the joint support mechanisms introduced last year – the ECB’s large asset purchases and Next Generation EU fund – are mitigating factors.
For the eurozone overall, the headline fiscal deficit widened to 7.2% of GDP in 2020 from 0.6% in 2019, with deficits ranging from 11.0% in Spain to 4.2% in Germany. Having declined for several years, eurozone public debt increased by 14.1pp to 98% of GDP. The largest increases were in Greece (by 25.1pp to 206% of GDP), Spain (by 24.5pp to 120% of GDP) and Cyprus (by 24.2pp to 118% of GDP). At almost 156% of GDP, Italy’s public debt at end-2020 was close to its post-World War I record high.
Related: Covid pushes UK government borrowing to peacetime record of £303bn
Employees at the Bank of Italy headquarters in Rome experienced problems with their PCs, emails and internal bank programs early Friday, fuelling concerns of a hacker attack, Bloomberg News is reporting.
Employees at the Bank of Italy headquarters in Rome experienced problems with their PCs, emails and internal bank programs early Friday, fueling concerns of a hacker attack https://t.co/3UVpKO7X8H
