What was the background to the Eurozone Debt Crisis?
The Eurozone debt crisis in the 2010s led to increasing poverty in Greece, Ireland, Spain and Portugal. Following the global financial crisis of 2008, many banks were in financial difficulty. European governments took on the debts of these banks, which along with responding to the direct impacts of the crisis, rapidly increased government debts.
In Greece, Ireland, Spain and Portugal there were fears the governments would not be able to keep paying debts, which would have caused further difficulties for banks across the continent.
Instead, the IMF and European institutions lent more money, which kept the debts being paid, but insisted that governments cut public spending and increased taxes.
What was the impact of the European Debt Crisis?
The response to the debt crisis led to increased unemployment, falling wages and increased poverty. In Greece, Spain and Ireland unemployment more than trebled between 2007 and 2013. In Portugal it doubled. Absolute poverty, also known as material deprivation, doubled in Greece and Ireland, and increased significantly in Portugal and Spain.
The crisis came to an end when the European Central Bank started buying government debts, allowing some of the austerity measures to be relaxed. In Ireland and Portugal it took until 2018 for unemployment to return to pre-crisis levels. In Greece and Spain they still have not, as of 2026.
Why is the European Debt Crisis still relevant?
The crisis shows that international debt can cause problems for people in any country. The IMF and EU pushed the same response – austerity rather than debt cancellation – on fellow European countries as they have on countries in Africa, Asia and Latin America.
Debt Justice requires a different approach to debt, which recognises that creditors are also responsible for debt crises. And requires creditors to cancel debts when paying that debt would cause increasing poverty.