Euro Zone Debt Continues To Rise Despite Austerity Measures Such As Cost-Cutting, Tax Hikes

The combined government debt of 17 euro zone nations rose to 92.2 percent of gross domestic product -- the highest in its history – in the first quarter of 2013, despite stringent austerity measures deployed in the region since the beginning of the financial crisis.

The debt for the economic bloc, which uses the euro as a common currency, was up from 90.6 percent in the previous quarter and 88.2 percent in the same period a year ago.

Meanwhile, the combined debt of 27 EU nations surged to reach 85.9 percent in the first quarter, up from 85.2 percent in the fourth quarter of 2012, and 83.3 percent in the same quarter a year ago, according to official data released, on Monday, by Eurostat, the statistical office of the European Union.

Greece, Ireland, Belgium, Spain, Portugal and Italy fared the worst in controlling government debt from rising, even as Germany’s debt fell to 81.2 percent in the first quarter, from 81.9 percent in the last quarter of 2012, making the country one of the top three performers in reducing debt, along with Denmark and Latvia.

The data was published two days after the world’s top 20 economies, or G-20, pledged, at a summit in Moscow on Saturday, to make growth a priority over austerity, as youth unemployment rates are approaching 60 percent in Greece and Spain -- the euro zone's most vulnerable economies.

Non-EU G-20 members, including the U.S., said that lowering unemployment should be the economic bloc's first priority, although key EU nations, such as Germany, continue to preach strict austerity and fiscal discipline.

Meanwhile, economists predicted that unemployment levels across the euro zone’s worst-affected nations -- Spain, Portugal and Greece -- are expected to rise, but an end to recession may not be very far, according to a Reuters poll conducted over the last week among 40 experts, and published on Monday.

Spain and Greece will continue to struggle to create jobs, and the jobless rates in both countries would remain above the 27 percent mark even in 2015, the poll found. According to Eurostat data, Greece's government debt currently stands at 160.5 percent while Spain's stands at 88.2 percent.

The overall unemployment rate in the euro zone in May was 12.2 percent, up from 12.1 percent in April, which translates to about 19.3 million people without jobs, according to Eurostat figures, released on July 1.

The lowest unemployment rates were recorded in Austria (4.7 percent), Germany (5.3 percent) and Luxembourg (5.7 percent), and the highest in Spain (26.9 percent) and Greece (26.8 percent in March 2013).

For comparison, the unemployment rate in the U.S. in May was 7.6 percent, up from 7.5 percent in the previous month, and down from 8.2 percent in May 2012.