The effect of the sizeable sovereign support for the banks, which impacted significantly on the 2010 fiscal deficit, allied to the rapid deterioration in the underlying fiscal deficit (Chart 12), led to an extremely sharp rise in the general government debt ratio (Chart 12).
This increased from a relatively low level of 25 per cent of GDP in 2007 to rise to more than 90 per cent of GDP by 2010. The increase in the deficit and debt ratios occurred despite the fact that considerable fiscal consolidation had already been underway since 2008.