Key facts
- Household debt in the EU was 49.4% of GDP in 2025, down from over 60% in 2020.
- The European Commission flags 55% of GDP as a level where household borrowing becomes a macroeconomic risk.
- All seven EU countries with household debt exceeding 55% of GDP are in northern or western Europe.
- Southern European countries like Italy (35.9%), Greece (38.0%), and Spain (42.9%) have household debt below the EU average.
- The Netherlands has the highest household debt at 93.5% of GDP, influenced by government incentives.
- Denmark (84.1%) and Sweden (82.3%) also rank among the most indebted in Europe.
Contrary to prevailing stereotypes, the most indebted households in the European Union are located in the wealthier northern and western regions, rather than the southern economies often perceived as financially fragile. Recent data from Eurostat reveal that household debt as a percentage of GDP has been declining across the EU and the euro area since 2020, yet several northern European nations exhibit significantly higher leverage ratios.
Household debt, encompassing mortgages, consumer loans, and other borrowings, is measured against a country's gross domestic product (GDP) to provide a comparable metric of leverage. While high debt is not inherently problematic, particularly in countries with developed mortgage markets and high homeownership, excessive leverage can amplify economic downturns. The European Commission identifies a debt-to-GDP ratio of 55% as a threshold where household borrowing begins to pose a macroeconomic risk, recalling the 2008 financial crisis which originated in household balance sheets.
The most striking finding is the inversion of the traditional north-south divide. Seven EU countries now exceed the 55% debt-to-GDP threshold, and all are situated in northern or western Europe. In contrast, southern European nations like Italy (35.9%), Greece (38.0%), and Spain (42.9%) demonstrate relatively modest household borrowing, well below the EU average, despite their historical struggles with sovereign debt.
Among the most indebted nations, the Netherlands leads with 93.5% of GDP, attributed to government policies making home borrowing attractive, including full-value mortgages and interest relief. Denmark follows at 84.1%, though this is substantially offset by large pension savings and property assets. Sweden's high debt of 82.3% is largely due to its dominant variable-rate mortgage market, making households sensitive to interest rate changes. Finland (62.9%) sees significant debt from housing company loans, while Luxembourg (60.5%) has concentrated mortgage debt among a portion of its households. France (59.5%) features predominantly fixed-rate mortgages and strict lending caps, Belgium (56.4%) has high homeownership with fixed-rate mortgages, and Cyprus (54.2%) is still resolving legacy non-performing loans. Germany, despite its economic strength, has a debt ratio of 49.0%, partly due to its lower homeownership rate and a large rental market.