Euro-Area Debt Falls to Lowest Since 2012 as Prospects Brighten

  • 3Q government debt for the region falls to 90.1% of GDP
  • Seasonally adjusted budget shortfall at 1.7% of output

Euro-area government debt declined to the lowest level in almost four years amid mounting signs that the economic recovery is gaining traction.

The ratio of debt to gross domestic product fell to 90.1 percent in the third quarter, the European Union’s statistics office said on Monday. That compares with 91.5 percent a year earlier and 91.2 percent in the previous three months and is the lowest level since the final quarter of 2012.

The region’s seasonally adjusted budget shortfall stood at 1.7 percent of output, down from 1.8 percent in the same period a year ago, Eurostat said in a separate report.

With government finances burdened by bank bailouts and economic contractions as a result of the financial crisis, European authorities are calling for more budget discipline as growth prospects improve. Under European Union rules, nations are required to keep their debt ratios below 60 percent of output and limit deficits to a maximum of 3 percent.

The currency bloc’s recovery has continued at a steady if moderate pace in the face of headwinds including the U.K.’s vote to leave the EU, slowing global trade and political uncertainty fueled by an upsurge of populist movements. Euro-area inflation accelerated to the fastest pace since 2013, while unemployment is at the lowest level in five years.

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