Interest payments eat up European tax takes

THE rate at which interest payments on government bonds are eating up the tax European citizens pay is accelerating, as investors wary of the deficit crisis drive up sovereign borrowing costs.

The chart shows the percentage of the tax take swallowed by interest payments in the region’s most indebted economies, based on data from Eurostat, the European Union statistics office. In Greece, the first to seek a bailout, a third of tax revenue goes to service the national credit card.

“Too-high interest costs tend to snowball and total debt then rises because of the payments,” said David Watts, a strategist at debt-research firm CreditSights Inc in London.