Eurozone crisis/Addendum

The financial status of the PIIGS countries

	Portugal	Ireland	Italy	Greece	Spain
Private sector debt 2008 (per cent GDP)
Public debt. 2010 (per cent GDP)	83.1	99.4	118.4	130.2	63.5
Percentage of public debt that is foreign-owned 2007	55	62	42		48
Average time to maturity of public debt, years	6.6	6.9	7.2	7.8	6.4
Primary budget deficit, 2010 (per cent GDP)	4.1	29.3	0.8	2.2	7.3
CDS spread, November 2010 (basis points)	510	595		1000	312
S&P credit rating, July 2010	A-	AA	A+	BB+	AA
Current account deficit, 2010 (per cent of GDP)	10.0	2.7	2.9	10.8	4.8

Sustainability adjustments

The primary budget balance (as a percentage of gdp) required to avoid an increase in the public debt is given by f = d(g - r) where r is the annual interest rate on the debt; and g is the annual growth rate of nominal GDP (See the debt trap identity)

	Portugal	Ireland	Italy	Greece	Spain
(g - r)  2003-2007	-0.2	2.2	-0.7	3.9	1.7
(g - r)  2009-2011	-3.3	-5.3	-3.6	-6.0	-2.3
Primary budget adjustment (% of GDP)	3.1	7.5	2.9	9.9	4.0

Source: Cinzia Alcidi and Daniel GrosIs: Is Greece different? Adjustment difficulties in southern Europe, Vox, 22 April 2010[1]

GDP growth

(per cent change on previous quarter)

	09	2010				2011
	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Eurozone	0.2	0.4	1.0	0.4

The bail-out clauses

The protocol of the Maastricht Treaty on economic and social cohesion contains the following clauses

Article 104b

1. The Community shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law, or public undertakings of any Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project. A Member State shall not be liable for or assume the commitments of central governments, regional, local or other public authorities, other bodies governed by public law or public undertakings of another Member State, without prejudice to mutual financial guarantees for the joint execution of a specific project.

Article 103a

1. Without prejudice to any other procedures provided for in this Treaty, the Council may, acting unanimously on a proposal from the Commission, decide upon the measures appropriate to the economic situation, in particular if severe difficulties arise in the supply of certain products.

2. Where a Member State is in difficulties or is seriously threatened with severe difficulties caused by exceptional occurrences beyond its control, the Council may, acting unanimously on a proposal from the Commission, grant, under certain conditions, Community financial assistance to the Member State concerned. Where the severe difficulties are caused by natural disasters, the Council shall act by qualified majority. The President of the Council shall inform the European Parliament of the decision taken.