Italy Set to Eclipse Greece as Eurozone’s Most Indebted Nation

The long shadow cast by Greece over Europe’s sovereign debt landscape is, at last, beginning to recede. In its place, a more familiar figure edges uneasily into view. According to officials and budget projections cited by Reuters , Italy is poised to overtake Greece as the eurozone’s most indebted country by the end of 2026 — a symbolic shift that speaks volumes about the changing fortunes of Europe’s southern economies. For much of the past decade, Greece has served as the cautionary tale of fiscal excess. Its debt crisis, which erupted with devastating force in the early 2010s, required three international bailouts totalling roughly €280 billion and ushered in an era of austerity that reshaped the country’s political and social fabric. Yet today, the narrative is one of steady, if hard-won, rehabilitation. Greek public debt, which stood at around 145 per cent of GDP in 2025, is projected to fall sharply to approximately 137 per cent in 2026. This marks a dramatic improvement of more than 45 percentage points since 2020, a period during which Athens has combined fiscal discipline with resilient economic growth. Officials have even signalled their intention to repay around €7 billion of bailout loans ahead of schedule — a gesture as much political as financial, underscoring Greece’s determination to turn the page on its crisis years. Italy, by contrast, finds itself moving in the opposite direction, albeit far from crisis territory. The country’s debt burden is forecast to rise from 137.1 per cent of GDP in 2025 to roughly 138.6 per cent in 2026, nudging it ahead of Greece in the eurozone’s debt league table. While the increase is modest, it reflects deeper structural challenges that continue to weigh on Europe’s third-largest economy. Chief among these is growth — or rather, the persistent lack of it. Italy’s economy is expected to expand by just 0.6 per cent annually over the next two years, a pace that does little to ease the burden of its vast public liabilities. External pressures, including elevated energy costs and geopolitical tensions linked to instability in the Middle East, have further complicated the outlook. Rome has sought to counterbalance these pressures through a mixture of fiscal prudence and creative accounting. Plans to raise billions through the sale of state assets — including stakes in energy and financial firms — are intended to chip away at the debt mountain. Yet such measures have drawn scepticism, with critics warning that they may amount to little more than “window dressing” in the absence of stronger underlying growth. None of this suggests that Italy faces an imminent crisis. Indeed, the eurozone as a whole is far better equipped to handle high debt levels than it was during the turmoil of the early 2010s. Borrowing costs, while rising, remain manageable, and the institutional framework underpinning the single currency has been significantly strengthened. Nevertheless, the optics of Italy supplanting Greece at the top of the debt rankings are difficult to ignore. For policymakers in Brussels and beyond, it is a reminder that the eurozone’s vulnerabilities have not disappeared — they have merely shifted. For Greece, the moment carries a certain quiet vindication. After years of austerity, reform and political upheaval, the country is emerging as a relative success story, its fiscal trajectory now firmly downward. For Italy, it is a prompt — perhaps an uncomfortable one — to confront long-standing economic weaknesses that no amount of fiscal manoeuvring can indefinitely obscure. In the end, the changing of the guard in Europe’s debt hierarchy is less a story of one country’s fall than of another’s recovery. Yet it also serves as a cautionary tale: in the eurozone, where growth remains elusive and external shocks are never far away, today’s progress can swiftly become tomorrow’s predicament. Click here for more News & Current Affairs at EU Today Click here to check out EU TODAY’S SPORTS PAGE! ___________________________________________________________________________________________________________________ Post Views: 634 EUToday Correspondents EUToday publishes articles from a variety of outside sources which express a wide range of viewpoints.Opinions expressed in these articles are not necessarily those of EUToday.