Week 25, 2011: European Government Net Borrowing

Summary: This week, the Greek government has pushed through an austerity budget, which has gone a small way towards easing fears of a default. If the statistics are to be believed, Greek government borrowing in 2010 (pre-bailout) was about the same as in the UK.

What does the chart show? The chart shows the net borrowing (borrowing minus lending) of several European governments. This is measured as a percentage of GDP. The black line is the average of the whole Eurozone area. A positive figure represents government borrowing (from central banks or from private investors), and a negative figure represents net lending.

Why is the chart interesting? The diverging fortunes of different economies is what makes this data set interesting. For example, in 2000 the UK and Ireland were two net lenders, but ten years later they were the first and third highest net borrowers. Note that the latest data is from 2010, before the bailouts for Greece and Ireland took effect. Also interesting is the contrast between Germany (and even the Eurozone average) and places like Portugal, Spain and Greece, and this helps explain some of the tensions currently threatening to tear the monetary union apart.

The Greek data should perhaps be taken with a pinch of salt - it is likely that their net borrowing was quite a bit higher than reported in 2010, and perhaps earlier.