Figure 9 Public debt in the euro area in 2019 vs. projection for 2021 Percent of GDP  Source: European Commission (Spring Economic Forecast, May 2020). The impact of the pandemic has been particularly harsh in those countries that had already incurred a high level of public debt before the current crisis.
The cost-or premium--of the financial-contagion insurance was the associated increase in the risk of higher inflation at some future date. This cost was viewed as relatively low at the time, largely because increased competition, driven by globalization, thwarted employers’ ability to pass through higher labor costs into prices.