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Debt level spikes in Greece, but drops in Italy and overall eurozone in third quarter
BRUSSELS (AP) ' Debt levels in bailed-out countries Greece, Portugal and Ireland continued to rise in the third quarter of last year, but they fell for Italy and the 17-nation eurozone as a whole, official statistics showed Monday.
Greece's debt level was highest, spiking to 159.1 percent of gross domestic product and suggesting that repeated austerity cuts have yet to turn the country's finances around.
Despite the deterioration in the weakest members, overall debt in the eurozone fell to 87.4 percent of GDP from 87.7 percent in the second quarter, thanks mainly to improvements in the biggest economies like Germany and France.
Investors will take heart from the Eurostat figures showing debt stabilized in both Italy and Spain, the two economies seen as the next shakiest members of the currency union.
Italy managed to bring its debt down to 119.6 percent from 121.2 percent the previous quarter. However, at euro1.88 trillion, its debt in nominal terms is still massive.
Spain's debt remained constant at 66 percent of GDP between the second and third quarters, although it was up from just 58.7 percent a year earlier.
The third-quarter figures give some hope that the eurozone may be able to contain the crisis to the three, relatively small countries it has already bailed out. During the third quarter, borrowing rates were rising sharply for countries like Italy, Spain and France ' they started shooting higher in August amid growing investor concern about their ability to repay their debts and the future of the euro itself.
But the biggest threat to stabilizing debt loads is the currency union's wobbly economy, which many economist believe has already fallen back into recession in recent months. If economic output falls, debt ratios rise even if the debt has declined in nominal terms.
Greece is by far the weakest economy in the eurozone and its debt levels continued to spiral out of control. The country's debt rose to 159.1 percent of GDP, or euro347.2 billion ($457 billion) , from 138.8 percent a year earlier and 154.7 percent in the second quarter.
A similarly big increase was seen in Portugal, which had to be bailed out in April. Its debt rose to 110.1 percent from 91.2 percent a year earlier and 106.5 percent in the previous quarter.
Ireland's debt reached 104.9 percent at the end of September, up from 88.4 percent a year earlier and 102.3 percent the previous quarter.
For the 27-country EU, which also includes non-euro countries like the U.K., debt rose to 82.2 percent from 81.7 percent in the second quarter.