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At the end of the first quarter of 2025, the financial situation of the European Union government presents a considerable challenge. The net financial assets stood at -€8.948 trillion, representing -49.4% of the region’s Gross Domestic Product (GDP). Despite an increase of €72 billion compared to the fourth quarter of 2024, this figure shows a decrease of €213 billion from the same period the previous year.
This data comes from a recent report by Eurostat that analyzes the financial accounts of the general government. This analysis includes transactions of financial assets and liabilities, as well as a summary of both categories. The result of the difference between them is known as net financial worth.
One of the main reasons behind the negative balance is the ongoing government deficit in the EU, which reached €166 billion by the end of the first quarter. This deficit is calculated as the difference between investments in financial assets and liabilities. However, it is noteworthy that this situation was partially mitigated by a positive appreciation of financial assets, which increased by €137 billion, largely due to the valuation of stocks. In contrast, negative revaluations of liabilities totaled €101 billion, mainly affected by fluctuations in debt bonds.
The most significant liabilities on the balance sheet of the EU’s general governments are debt securities, which show considerable variability depending on their trading in financial markets. This scenario highlights the need for careful and proactive management of public finances in the region, especially in an economic environment marked by inflation and global uncertainty. The evolution of net financial worth not only reflects the economic health of the union but also directly impacts the governments’ capacity to respond to future crises and maintain economic stability.
Source: MiMub in Spanish
