Why do governments borrow?
Borrowing isn’t only patchwork — it’s how countries finance projects that outlast a single budget and cushion the economy when shocks hit.
- Invest & build. Roads, rail, schools, hospitals, clean energy and defence.
- Handle shocks. Recessions, disasters or pandemics can cut tax income while costs rise.
- Smooth timing. Spending is lumpy; tax flows are steady. Debt bridges the gap.
Debt-to-GDP, in plain words
Debt is reported in euros (€) and as a share of the economy: the debt-to-GDP ratio. It puts debt in context by comparing it with what the economy produces in a year.
Debt vs. deficit: what’s the difference?
Debt is the total outstanding stock from past borrowing. A deficit is a yearly shortfall when spending exceeds revenue. Deficits add to debt; surpluses can reduce it.
Why does debt matter for people?
Debt affects everyday life through three channels:
- Interest costs — money spent on interest can’t fund schools or healthcare.
- Policy room — lower interest bills give more space to invest or respond to shocks.
- Stability — in the EU, debt and deficits are monitored to keep finances sustainable.
How does debt change over time?
Three forces shape debt-to-GDP:
- Primary balance: budget before interest. Surpluses push debt down; deficits push it up.
- Growth vs. interest: if growth outpaces the interest rate on debt, the ratio can stabilise or fall.
- One-offs: bank rescues, asset sales, inflation shocks or FX moves (outside the euro).
FAQ
Who lends to governments?
Mainly investors who buy government bonds: banks, pension funds, insurers and sometimes other countries or institutions.
Is there a “safe” level of debt?
No single number fits all. In the EU, 60% of GDP is often used as a guide, but sustainability depends on growth, interest rates, demographics and policy.
Where can I see current figures?
Use the EU map and click a country for a live estimate based on the latest reference dates.
Sources: Eurostat (government finance statistics) and national finance ministries. Educational overview; not investment advice.