Non-Financial Debt Is The ‘Rotten Core’ Of EU Economy: Lombard Street

Deleveraging is taking place across the EU, so the story goes, with some countries more aggressively shedding debt than others. But even where this is true, the deleveraging story only really applies to the financial sector. Private, non-financial debt as a percentage of GDP has continued to grow in most EU countries, and according to Jamie Dannhauser of Lombard Street Research it is the rotten core of the Eurozone that threatens to drag everything else down with it.

Increase in non-financial debt

“Private non-financial sector debt has increased dramatically relative to GDP across the advanced world over the last thirty years, but especially since the late 1990s,” writes Dannhauser. “In the eurozone, excessive debts are more pervasive...