Europe's public finances are under growing pressure as government borrowing continues to rise. New figures released by Eurostat on 21 October 2026 reveal that debt across the eurozone reached 88.8% of gross domestic product (GDP) during the second quarter.

The increase highlights significant differences between European economies. While some countries are gradually reducing their debt burdens, others face rising liabilities and more expensive borrowing, creating difficult choices over future spending.

How Much Does Europe Owe?

Government debt across the 21 eurozone countries reached approximately €14.44 trillion between April and June 2026. The debt-to-GDP ratio increased from 88.4% in the first quarter to 88.8%, compared with 87.3% a year earlier.

Across the entire European Union, the ratio rose to 82.9%, up from 81.4% in the second quarter of 2025.

Under the EU's fiscal framework, reference limits are set at 60% of GDP for government debt and 3% for annual budget deficits. However, several countries remain considerably above these thresholds.

Italy Approaches Greece's Debt Level

Greece continues to record the highest government debt ratio in the European Union, at 140.8% of GDP. Italy follows closely at 139.9%, leaving less than one percentage point between them.

Despite remaining heavily indebted, Greece has made substantial progress. Its debt ratio declined by 11.2 percentage points over the previous year, reflecting improvements in its public finances.

Italy has followed a different trajectory, with its debt ratio increasing by 1.3 percentage points during the second quarter alone.

The contrast is particularly striking given that Greece's debt stood at 177.8% of GDP in 2022, compared with Italy's 138.4%.

France Faces Growing Pressure

France recorded government debt equivalent to 119.1% of GDP, making it the eurozone's third most indebted economy.

Its ratio increased by 1.4 percentage points during the second quarter, while borrowing costs also rose.

Higher yields on government bonds mean that financing new debt can become more expensive. Over time, this may leave governments with less money available for infrastructure, healthcare and other public services.

Belgium also recorded a substantial debt burden at 110.2%, followed by Spain at 101.4%.

Which Countries Have Lower Debt?

Not every European economy faces the same financial pressures.

Estonia recorded the EU's lowest debt ratio at 26.1%, followed by Denmark at 27.1%, Luxembourg at 28.2% and Bulgaria at 28.7%.

However, low debt does not automatically guarantee financial stability. Economic growth, government revenues and future spending obligations also influence a country's ability to manage borrowing.

During the second quarter, Poland recorded the largest quarterly increase in its debt ratio, at 3 percentage points, while Cyprus achieved the largest reduction, at 3 percentage points.

Why Rising Debt Matters

Government borrowing can support essential investments, but persistent debt growth may increase interest expenses and limit financial flexibility.

The challenge becomes particularly difficult when economic growth is weak or borrowing costs rise.

European governments must balance investment needs with credible plans for managing future expenditure.

What Happens Next?

Europe's latest figures reveal contrasting financial trends, with Greece reducing its debt burden while Italy and France face additional pressure. Maintaining sustainable public finances will depend on economic growth, borrowing conditions and the ability of individual countries to control future deficits.