The state of the euro zone

The debt crisis in the 17-country currency union continues to escalate as financial woes spread from small nations
like Greece, Portugal and Ireland to Italy and Spain, the zone's third- and fourth-largest economies.

Size of economy

GDP in U.S. dollars, 2012 forecast

Size of economy

Government debt

Percentage of GDP, as of Q4 2011

Size of economy

the most

Italy has been deeply indebted for years, and recent fighting over the budget has rapidly increased borrowing costs as investors lose confidence in the country’s financial stability.

Borrowing costs have also surged in Spain, and while the country’s debt burden isn’t as pronounced as Italy’s, Spain runs a higher budget deficit.

Greece, Portugal and Ireland have received bailout funds from the IMF and the EU after agreeing to a series of austerity measures.

The rising cost of borrowing

10-year bond yield spreads over benchmark German bonds*

Size of economy

Source: European Commission. | Graphic: The Washington Post. | *Because Ireland no longer issues 10-year bonds, the chart reflects the difference between Ireland's nine-year bonds and comparable German government securities. | Published July 12, 2011. Updated June 2, 2012.