10 min read — Economy | Portugal | Italy | Ireland | Greece | Spain
Revenge of the PIIGS...? The Economic Turnaround of Portugal, Italy, Ireland, Greece and Spain
By Nuno Dias Pereira — Senior Editor, Economy Correspondent
Edited/Reviewed by: Dr. Max Berre
September 24, 2025 | 13:00
However, the birth of the concept predates the recession that made the countries (Portugal, Italy, Ireland, Greece and Spain) composing the derogatory acronym popular for severe reasons. The term apparently dates back to the 1990s in European circles (though Ireland was not originally part of the gang, having been lumped together later on).
As history goes, these countries underwent severe periods of financial austerity, under which loans were made to shore up their finances, in return for stricter budgetary control and public cuts, under the expectation of better days ahead and increased trust of financial markets, , all the while being criticized, judged and scrutinized.
In the present day, in a world rocked by global pandemics, inflationary pressures, troubled geopolitical conflicts and the breakdown of transatlantic partnerships long believed to be resilient, the PIIGS now emerge as the once thought unlikely examples of the Eurozone. This is a direct contrast with countries known to lead the European Union’s ambitions, now considered to be ailing, as exemplified by France’s budgetary debt cliff, Germany’s gloomy doldrums and the Netherlands’ political tension.
But how is the apparent comeuppance of the PIIGS shaping up to be?
A New Hope For Growth?
The EU has long been dogged by low growth, but differences between countries remain stark. However, even considering a European market known for limited rates of growth, there are countries contributing to higher rates than others.
Eurostat figures make it clear that, shortly after 2008, even with Ireland at the forefront, France and Germany were above the average real GDP growth of the 27 member states, with the remaining PIIGS lagging behind.
Nonetheless, as we jump to the present day, among the countries being analysed, the picture has undergone a curious inversion. Though Ireland remains at the forefront, most of the PIIGS now boast real GDP Growth rates above the EU average, with France and even Germany now lagging behind.
Several reasons could be explored concerning the origin of the inversion of these growth tendencies: Ireland has benefited from multinationals’ growth, while Portugal and Spain have seen a rebound of tourism since the pandemic, and Greece has enjoyed both tourism’s recovery and EU-funded investment. In contrast, Germany has been impacted by the energy crisis post the Ukraine’s invasion by Russia, with its iconic energy-heavy industries becoming an indirect casualty.
Naturally, this reversal does not erase years of weak performance that came before, but they certainly won’t hurt. In contrast, lower or even negative growth rates can harm countries, when observed alongside other structural elements, such as employment tendencies and budgetary needs.
The Rise of Employment
The Eurozone crisis scarred labor markets deeply. Southern Europe endured double-digit unemployment, while Germany boasted record employment.
Though more than a decade has passed and great steps have been taken in the different countries analysed, a gap can still be found between their employment rates:
On one hand, it is possible to see that the countries more impacted by the euro crisis had long and drawn out recoveries of their employment rates. However, it can also be interpreted as more dynamic economies with more readily available workforce, enjoying more flexible labor markets developed post-austerity reforms, compared with economies where available workforce has dwindled or stagnated.
Nonetheless, a further question ought to be considered for the future: employment has risen, but in countries forced to undergo strict reforms, and across the European Union, what type of jobs are really considered for these statistical values, if the definition of employment, per International Labour Organization, corresponds to a person that, during a given week, worked at least one single hour for pay, profit or gain?
The Return of Deficit and Debt
Budgetary orthodoxy was once imposed on the PIIGS as the price of survival.
While analysing the deficit of the countries in question, it’s possible to observe that most of them have not had a strong history of budgetary surplus since the 2008 recession, demonstrating meager surplus that were again impacted by the COVID pandemic:
The irony is not lost that, as of 2024, of the countries under analysis, the ones with actual surplus were the ones once shamed for the budgetary control, while the once dynamic “motors” of the EU are yet to fully recover from the COVID crisis. However, as tariff wars loom and defense spending grows, who is to stay whether the budgetary balance will remain?
Such reversal can clearly be expected to have an impact on the government debt that these countries have incurred on, currently standing as displayed below:
Attack of the Bonds
Going back to the roots of the Eurozone Debt Crisis, where countries saw expected interest rates of their debt emissions skyrocket, the austerity aimed at stabilizing the financial markets seemed to have worked, based on the apparent ongoing convergence of 10 Year Bond yields, as exemplified by the graphs below:
Yet spreads remain, reflecting differences in fiscal position, growth prospects, and political stability. The fact that the PIIGS are no longer financial pariahs, with Greece displaying yields once considered unthinkable, and Germany and France being treated with more caution, signaling a significant shift in market perception.
However, it is clear that some differences still remain in the yield expectations of countries, which are based on a multitude of factors, such as the country’s fiscal position, economic growth prospects, the usual market sentiment and risk appetite or even the political stability.
Political Instability Strikes Back
Success stories are not only comprised of economic success, but also of values that these societies purport to represent and if they achieve, defend them. With the world living in a multipolar dynamic of increasingly complicated balancing acts, despite its differences and fluctuations, democratic values across the countries have remained somewhat stable, as per the Democracy Index:
Unfortunately, as political instability has also grown across western democracies, so did the corruption perceived its citizens (the lowest the score achieved by a country, the worse is the perceived corruption in the country):
Director’s Cut
Certainly, as the global economy evolves and conditions under which nations operate shift, EU member states may find themselves in more or less advantageous positions in regard to one another.
Though needless to indicate that current conditions are not bound to last or remain as they are for long, it is possible to indicate that the formerly known PIIGS find themselves in certainly more favourable than they were 15 years ago, some better than others, the same applying to the “motors” of the EU.
Just as during the eurozone crisis, in which solidarity was provided, though not always provided without harsh judgement or without self-preservation in mind, and where the infamous PIIGS term was coined, so has come a time where the once defined growth motors of the European Union find themselves in less favourable conditions.
The European Project, as it is today, requires a degree of trust in one another that can sometimes appear difficult to achieve, given past history. This only reinforces the need for strengthened ambition and dedication to learn from the past and improve what all member states accomplish together.
As a great Jedi master once said, “we are what we grow beyond.“
Disclaimer: While Euro Prospects encourages open and free discourse, the opinions expressed in this article are those of the author(s) and do not necessarily reflect the official policy or views of Euro Prospects or its editorial board.
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