The numbers, at first glance, paint a surprising picture of corporate indebtedness across the European Union. While attention often fixates on sovereign debt, a different landscape emerges when examining the borrowing habits of non-financial corporations. New Eurostat data reveals that several of Europe’s smaller financial hubs, rather than its traditional economic powerhouses, are home to companies with the highest debt-to-GDP ratios. This measurement, which includes bank loans and corporate bonds but excludes intra-company loans within the same nation, stood at 70.1% for the EU as a whole at the close of 2025, and a slightly higher 71.6% within the eurozone. Both figures represent nearly two-decade lows, largely due to robust nominal economic growth outpacing new corporate borrowing.
Luxembourg, for instance, registers a corporate debt figure exceeding two and a half times its annual economic output, making it the highest in the EU. However, this figure is widely regarded as a reflection of its pivotal role in international corporate finance rather than an indicator of excessive borrowing by domestic businesses. The nation hosts thousands of foreign-owned holding and financing companies, whose extensive debt is typically offset by substantial financial assets. Similarly, the Netherlands and Cyprus, also high on the list, exhibit inflated corporate debt statistics because of their function as conduits for international investment. Multinational companies account for an estimated 60% of all corporate debt in the Netherlands, much of it representing internal financing between different segments of the same corporate group. In Cyprus, the European Central Bank estimates that entities with minimal or no real economic activity account for the majority of its international assets and liabilities, channeling over 80% of cross-border investment. These dynamics mean that a significant portion of the recorded debt in these countries represents international financing structures, not the borrowing of businesses actively engaged in their respective local economies.
Belgium presents a comparable situation, with its position largely influenced by its historical role as a base for multinational firms managing internal financing operations. For years, international groups established financing companies in Belgium to leverage favorable tax arrangements. The National Bank of Belgium suggests that once these intra-group financing activities are filtered out, the country’s actual corporate debt falls considerably, to approximately two-thirds of GDP. This highlights a crucial methodological point: Eurostat excludes lending between companies located in the same country, but cross-border financing between entities within the same multinational group remains included. In these international financial centers, such cross-border intra-group flows substantially inflate the headline corporate debt ratios.
In contrast, Sweden and Denmark stand out among the highly indebted nations where the corporate debt is largely considered genuine. Sweden’s elevated figures stem predominantly from borrowing by domestic companies, particularly within its real estate sector. These firms borrowed extensively during the era of exceptionally low interest rates through both banks and bond markets. The sharp rise in interest rates after 2022 transformed this sector into a significant financial vulnerability for the country. Denmark’s high corporate debt is also largely authentic, driven by its major international companies, including Novo Nordisk, DSV, Carlsberg, and Ørsted, which have increasingly tapped international bond markets to fuel their global expansion. Danmarks Nationalbank notes that corporate bond borrowing in Denmark has tripled over the past five years, with most of this debt held by foreign investors and often issued through subsidiaries located outside the country, reflecting the global reach of Danish businesses.
France, however, emerges as a distinct case among the larger economies. Its elevated corporate debt is widely considered a genuine macroeconomic concern, rather than a statistical distortion related to international financial hubs. The Banque de France has consistently identified French companies as having the highest indebtedness among the eurozone’s major economies. Even after accounting for significant cash reserves held by many businesses, their leverage remains well above the eurozone average. The central bank has also voiced concerns regarding the comparatively high debt-servicing costs faced by French businesses when measured against many of their European peers. This situation contrasts sharply with Greece and Italy, which, despite having the highest public debt burdens in the EU, maintain corporate sectors among the least indebted in the eurozone, with corporate debt standing at 58.6% of GDP in Greece and 55.1% in Italy, both well below the EU average. Their debt is primarily concentrated in the public sector, not among private companies. The European Commission’s 85% of GDP threshold, introduced after the global financial crisis as a warning indicator, serves to prompt closer scrutiny rather than automatically signaling distress, highlighting the need to distinguish between genuine economic vulnerabilities and statistical artifacts.
