By Daniel Hunter

Across Europe, public debt levels stand at their highest levels in peacetime, with the total stock of government debt outstanding across the 27 EU economies having risen above €10 trillion earlier this year. This averages out at around €21,000 (around £17,000) for every person in the EU, according to analysis in a new report from PwC.

While waves of austerity measures have been announced to address the high debt levels, the PwC analysis suggests that deleveraging will extend to 2020 and beyond for many EU countries if they are to meet the 60% of GDP debt target in the new EU fiscal pact.

The UK does not have the worst public debt position, with net government debt per person being the third lowest in the G7 (only Germany and Canada are lower as the table below shows). But the UK has problems of its own in terms of the overhang from high household debt and a budget deficit that has fallen since 2010, but still has a long way to go before it reaches sustainable levels as last week’s Autumn Statement made clear.

“Our analysis suggests that further consolidation measures in excess of those already announced will be necessary in many EU countries," John Hawksworth, chief economist at PwC, said.

"For the UK, this was confirmed by the Autumn Statement, which made clear that austerity would have to be extended to at least 2018 to eliminate the structural budget deficit.

“Europe’s debt and competitiveness problems have built up over more than a decade and are likely to take more than a decade to resolve — so growth in the region is likely to remain below historic norms for some years to come.

“In this ‘new normal’ environment, UK business needs to remain agile: planning for continued shocks from the eurozone, while looking further afield to the BRICs and other emerging economies for longer term growth.”

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