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.


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 on May 10, 2010 approved a 750 billion euro stabilization package to support the PIIGS nations.

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.