What is 'PIIGS'

PIIGS is an acronym for five of the most economically weak eurozone nations during the European debt crisis that started in 2008-2009: Portugal, Italy, Ireland, Greece and Spain. At the time, the acronym's five countries drew attention due to their weakened economic output and financial instability, which heightened doubts about the nations' abilities to pay back bondholders and spurred fears that the nations would default on their debts.


The PIIGs distinction serves to highlight economic disparities among nations in the European Union by grouping together the most economically troubled eurozone countries during the ongoing European debt crisis. Since these nations use the euro as their currency, they were unable to employ independent monetary policy to help battle the global economic downturn after the start of the U.S. financial crisis in 2008. In an effort to reduce speculation that the EU would abandon these economically disparaged countries, European leaders approved a 750 billion euro stabilization package to support the PIIGS nations on May 10, 2010.

The term's use — often criticized as being derogatory — dates back to the late 1970s although an earlier iteration, PIGS, did not include Ireland until 2008, when Ireland's financial crisis of the time pushed its economy into debt and a financial situation akin to those of the PIGS nations.

PIIGS and their Economic Impact on the EU

According to Eurostat, the European Union's statistics office, GDP growth for the eurozone reached a 10-year high in 2017; however, the PIIGS nations have been blamed for slowing the eurozone's economic recovery following the 2008 financial crisis by contributing to slow GDP growth, high unemployment and high debt levels in the area.

Compared to precrisis peaks, Spain's GDP was 4.5% lower, Portugal's was 6.5% lower and Greece's was 27.6% lower as of early 2016. Spain and Greece also had the highest rates of unemployment in the EU at 21.4% and 24.6%, respectively — although estimates as of late 2017 forecast those figures will shrink to 14.3% and 18.4% by 2020, per the International Monetary Fund. Sluggish growth and high unemployment in these nations is a major reason why the debt-to-GDP ratio of the eurozone rose from 79.3% at the end of 2009 to 89% in 2016, the most recent full-year data available as of early 2018.

This chronic debt persists despite both the U.S. Federal Reserve's massive quantitative easing (QE) program, which has supplied credit to European banks at near-zero interest rates, and harsh austerity measures imposed by the EU on its member countries as a requirement for maintaining the euro as a currency, which many observers believe has crippled economic recovery throughout the whole region. As of the third quarter of 2017, Greece's public debt to GDP ratio is 177.4%, Ireland's is 72.1%, Italy's is 134.1%, Portugal's is 130.8% and Spain's is 98.7%. To compare, Europe's average was 88.1% in the same period while the EU's figure was 82.5%. 

PIIGS: A Threat to the Livelihood of the EU?

The economic troubles of the PIIGS nations reignited debate about the efficacy of the single currency employed among the eurozone nations by casting doubts on the notion that the European Union can maintain a single currency while attending to the individual needs of each of its member countries. Critics point out that continued economic disparities could lead to a breakup of the eurozone. In response, EU leaders proposed a peer review system for approval of national spending budgets in an effort to promote closer economic integration among EU member states.

On June 23, 2016, the United Kingdom voted to leave the EU, which many cited as a result of growing unpopularity toward the EU concerning issues such as immigration, sovereignty and the continued support of member economies suffering through prolonged recessions, which has raised tax burdens and depreciated the euro.

While political risks associated with the euro and exemplified by the Brexit vote remain, the debt problems of Portugal, Italy, Ireland, Greece and Spain, have lightened in recent years. Reports in 2018 have pointed to improved investor sentiment toward the nations, as evidenced by Greece's return to the bond markets in July 2017 and increased demand for Spain's longest-term debt.

  1. Euro

    The euro is the official currency of 19 members of the European ...
  2. European Monetary System - EMS

    The European Monetary System (EMS) is an arrangement between ...
  3. Monetary Union Index Of Consumer ...

    An average measure of inflation for all countries located in ...
  4. Debt-To-GDP Ratio

    The ratio of a country's national debt to its gross domestic ...
  5. Irexit

    Irexit refers to Ireland's potential exit from the EU.
  6. Gross Domestic Product - GDP

    GDP is the monetary value of all the finished goods and services ...
Related Articles
  1. Insights

    An Introduction To The PIIGS

    Learn which countries are included in the PIIGS and why they are grouped together.
  2. Insights

    Eurozone Gains Momentum--But Can It Last?

    Eurozone economic growth has picked up, most notably in France and Italy, but can it last, particularly as Greece continues its standoff with creditors?
  3. Investing

    5 Ways The Greek Crisis Could Affect Your Personal Finances

    Keeping an eye on what is happening in Europe could help prepare you for what the future may hold.
  4. Trading

    Behind The Euro: History And Future

    The euro was designed to create economic parity among eurozone nations. Discover where it's going and where it's been.
  5. Insights

    Why These European Countries Don't Use the Euro

    The euro is a common currency of the European Union. Yet, many EU countries don’t use the euro. Investopedia explores why.
  6. Insights

    Understanding the Downfall of Greece's Economy

    Greece has defaulted on its debt. Such an unprecedented event has left many wondering how Greece’s situation ever got so messy.
  7. Investing

    Will Spain Exit the Euro?

    With a "no" vote in last Sunday’s referendum on whether the Greek people would accept imposed austerity measures, chances of a Greek exit from the euro have substantially increased. Will Spain ...
  8. Insights

    5 Times the European Central Bank Got It Right This Century

    Find out how the ECB made the right moves in pulling the eurozone through many difficult periods despite skepticism the euro would stand the test of time.
  9. Insights

    Portugal Economics: 4 Troubling Similarities to Greece

    Learn about the similarities and differences between the economic woes of Portugal and Greece, and get some statistics and analyses.
  10. Taxes

    Ireland Economics: 3 Troubling Similarities to Greece

    Discover how recent political changes in Ireland could compromise years of balance sheet improvements and economic growth, risking a Greece-like calamity.
  1. Which developed country has the most debt?

    Discover the nations that have the largest net government debt, viewed in terms of absolute dollar amount or as a percentage ... Read Answer >>
  2. What are the typical day-to-day responsibilities of a Chief Operating Officer (COO)?

    Learn how a country's debt crisis affects the world, including how currency values, inflation and output are affected on ... Read Answer >>
  3. When and why did the euro make its debut as a currency?

    On January 1, 1999, the European Union introduced its new currency, the euro. Read Answer >>
Hot Definitions
  1. Ethereum

    Ethereum is a decentralized software platform that enables SmartContracts and Distributed Applications (ĐApps) to be built ...
  2. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  3. Financial Industry Regulatory Authority - FINRA

    A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's ...
  4. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  5. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  6. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
Trading Center