Hungary tops EU ranking in gov’t debt held by households

Government debt grows across the EU

Consolidated gross government debt was highest in the EU in 2020 in France, Italy and Germany. These are the only three member states where debt exceeds EUR 2,000 billion. (The UK used to be on the podium before it left the EU.)

The coronavirus had a tangible effect last year, as debt rose in all member states without exception.

Hungary is in the midfield with its government debt of EUR 106 bn, a EUR 11 bn increase from the previous year.

Holding on to first place

Eurostat data also reveal what percentage of debt households and non-profit institutions serving households hold in each member state. Just like last year, Hungary is third in this ranking, behind Italy and Portugal.

Italy has apparently fixed the previous year’s faulty data, although there was still a slight decrease in debt held by households. The figure remained largely unchanged in Portugal.

In Hungary, there was a significant increase in government debt held by households in 2019 due to the launching of the MÁP+ “superbond”. This effect was negligible last year, but Hungary still produced the biggest growth in debt held by households among countries on the podium.

On the entire list, the corresponding figures of Poland, Ireland and Romania grew the most compared to the previous year.

Looking at the percentage of government debt held by households, Hungary retained its lead in the EU as households account for 24% of debt.

It should be noted however, that this 24% compares to 27% in 2019, partly because the MÁP market is becoming saturated and partly because households put less savings into retail government securities last year due to the pandemic.

There is a similar trend in Malta, where the ratio dropped form 23% to 19% and in third-placed Portugal as well. The only other country with more than 10% was Ireland.

There are a number of member states where retail government securities are not in vogue: the ratio of government debt held by households is below 1% in 14 countries on the list.

Meanwhile, households increased their stake in government debt in several countries in the CEE region including Poland, Romania, and Czechia despite the pandemic.

Long maturities dominate

Eurostat also released a breakdown of how the government debt held by households is distributed between securities with a maturity of less than one year and those with longer maturities.

This shows that Malta’s 19% is almost completely made up of longer maturities, while in Hungary short maturities account for 3.5% in the 24% total. The shift towards longer maturities was noticeable: while the ratio of short and long maturities was 11% and 9%, respectively, in 2018, longer maturities took the leading role in 2019 as the MÁP+ superbond debuted.

It is also interesting that the ratio of longer maturities remained the same, which means last year’s decrease was clearly due to securities with short maturities.

In the EU, only Portugal and Ireland has a higher ratio of short maturities than Hungary.

Cover photo: Getty Images