Public finance|The aging of the population, growing defense spending, combating climate change and digitization will increase public finance spending for decades.
European the central bank warns the euro area about the growing debt burden of the public finances in a review published on Wednesday.
The aging of the population, growing defense spending, combating climate change and digitization will increase public finance spending for decades. Therefore, especially the heavily indebted euro countries should pay attention to their indebtedness now.
According to the economists of the central bank, in order to secure debt sustainability, the deficit of the public finances of the euro area should be reduced by five percent in relation to the gross domestic product by 2070. This would mean that public finance expenditures should be reduced or revenues should be increased by 720 billion euros compared to the current level.
European According to Eurostat, the Union’s statistical authority, the euro area’s public finance debt in relation to gross domestic product was 89 percent at the end of last year. The most heavily indebted countries are Greece, Italy and France.
In Greece the debt ratio was 162 percent, in Italy 137 percent and in France 111 percent.
Finland’s debt ratio was 76 percent at the end of the year, but the Ministry of Finance predicts that it will increase to 81 percent this year.