This was partly due to repeated breaches of the fiscal rules – incidentally by Germany too, shortly after the launch of monetary union – which the capital markets failed to punish by demanding higher risk premiums because the no-bailout clause lacked credibility.
But another reason for the ballooning debt levels was undoubtedly the financial crisis, which saw a number of euro-area countries being forced to shore up their banking systems. This was compounded in the subsequent sovereign debt crisis by emerging doubts over debt sustainability in some member states. Rescue measures were swiftly rolled out to prevent the crisis from coming to a head.