Public debt increased in 19 EU countries between the first quarter of 2025 and the first quarter of 2026. Portugal moved in the opposite direction.
Its debt-to-GDP ratio fell by 3.9 percentage points over the period, one of the largest reductions in the European Union. Finland added 5.5 points, France 4 points and Belgium 3.1 points. Across the EU as a whole, public debt increased from 81.4% to 82.9% of GDP.
Portugal’s improvement has been building for several years. Public debt reached 134.1% of GDP during the pandemic in 2020. By the end of 2025, it had fallen to 89.7%. The amount of debt itself still increased that year, but economic growth was strong enough to reduce its weight relative to GDP.
Fitch Ratings now points to Portugal, Greece and Cyprus as examples for other highly indebted European economies. All three have received three rating upgrades from Fitch since 2022, helped by debt reduction that has been considerably faster than the eurozone average. Portugal currently holds an A rating, with Fitch raising its outlook to Positive in March 2026.
The agency attributes much of the difference to sustained primary budget surpluses. Spain and Italy also benefited from favourable economic growth after the pandemic, but their progress on debt and sovereign ratings has been more limited.
The next few years may be more difficult. EU recovery funding peaks in 2026, the post-pandemic tourism rebound has largely run its course, while ageing populations and higher defence spending will put additional pressure on public finances.
Portugal still carries a substantial public debt. What has changed is the direction. A country that spent much of the previous decade being discussed as a European fiscal problem is now being cited by Fitch as an example of how sustained debt reduction can be achieved.
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