Public Debt Soars In Europe : A Growing Threat To Economic Stability ?

European economies are facing a worrying reality: a public debt that keeps rising. While budget stability is supposed to be a priority for governments, several countries in the European Union now show debt levels that far exceed 100 % of their GDP. This situation raises questions about macroeconomic risks and the potential consequences for financial markets.

An Europe Burdened by Debt

The trajectory of debt in Europe reflects an increasing difficulty in controlling public deficits. Indeed, recent data shows that six EU countries today exceed the 100 % debt-to-GDP ratio: Greece, Italy, France, Belgium, Spain, and Portugal. The French situation is particularly scrutinized, as its debt has increased by 1.6% in a single quarter, surpassing €3,230 billion.

In this context, the European Central Bank (ECB) faces a dilemma. Should it continue raising rates to contain inflation, risking stifling growth and further burdening public debts? This question divides observers, especially since some countries like Bulgaria (22.1 %) and Estonia (23.8 %) show much more manageable ratios. The possibility of stricter budgetary intervention could exacerbate economic and political tensions within the EU.

What impact on markets and cryptos?

A large majority of investors closely monitor the evolution of these budgetary imbalances, as a debt crisis could provoke turbulence in traditional financial markets. The cost of borrowing for states is increasing, which impacts the financing of infrastructure and public services. Moreover, a rise in interest rates could slow down investments, affecting growth and the stability of the euro.

This instability could enhance the attractiveness of alternative assets, particularly cryptos. In a context where trust in traditional currencies is being severely tested, investors are seeking refuges outside the traditional financial system. Thus, gold and bitcoin, perceived as alternatives to inflation and sovereign risks, could see their adoption accelerate.

Medium-term prospects remain uncertain. If indebted states manage to stabilize their situation through budgetary reforms, market confidence could be restored. But in the event of prolonged deterioration, the volatility of currencies and the search for safe havens may accelerate a transition to a more decentralized financial model. The colossal debt of some countries could then become an unexpected catalyst for the adoption of cryptos.