Calculate Europe’s potential debt spirals

By Breakingviews Columnists
November 16, 2011

The calculator shows what level of primary surplus is needed to keep Spain’s debt-to-GDP level stable.

The key variables are the current debt load, the growth rate and primary surplus. The calculator assumes all debt is refinanced at current levels. It uses the European Commission’s most recent forecasts for Spain’s growth and deficit in 2012, and current 10-year bond yields, but you can use your own inputs.

We have also published an updated version of our Italian debt calculator. This uses 7-year rather than 10-year interest rates and a long-term estimate of growth. On that basis, our latest estimate is that Rome needs to generate a primary surplus of 5.2 percent to keep its debt/GDP ratio stable over the long term.

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