The government debt ratio fell rapidly last year

Ireland’s debt ratio as a percentage of gross domestic product (GDP) has fallen faster than every other country in the European Union except two, according to the latest Eurostat data.

Overall, the euro zone’s debt-to-GDP ratio fell to 86.1 pc in the third quarter of 2019, from 87.1 pc. Cyprus led the way, followed by Portugal and then Ireland.

In the 12-month period to the end of September, the government debt ratio had fallen by 5 percentage points from the previous year thanks to another year of meteoric economic growth.

Ireland’s debt itself, however, did not fall and stood at € 212 billion, or 62.6% of GDP, the European Statistics Agency reported.

Although the debt to GDP ratio is the standard measure used by the EU, it does not suit the economy here which is skewed by the presence of so many multinational companies.

A better measure that shows the size of the debt relative to the actual size of the national economy puts the output ratio at 107pc.

Thanks to ultra-low interest rates, the cost of servicing the government’s debt has plunged and fell last year from € 747m to € 5.22bn.

Former chief economist of the International Monetary Fund (IMF), Olivier Blanchard urges governments to borrow more and he said “frankly speaking, public debt could have no budgetary cost”.

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