By Nick Mann | 23 April 2012
European Union member states’ combined deficit fell last year, but levels of public sector debt increased, according to figures published today by Eurostat.
The EU’s statistical service issued provisional data which indicates that government deficit as a percentage of gross domestic product was 4.5% for the EU27, compared to 6.5% in 2010. For the 17 countries in the eurozone, the figure also fell – from 6.2% in 2010 to 4.1% in 2011.
However, government debt as a percentage of GDP for the EU as a whole increased from 80% at the end of 2010 to 82.5% at the end of last year, and rose from 85.3% to 87.2% for the eurozone over the same period.
In total, 24 EU member states posted an improvement in their government deficit relative to GDP between 2010 and 2011 and only Slovenia and Cyprus saw their deficit ratio worsen. Three countries – Hungary (4.3%), Estonia (1%) and Sweden (0.3%) – registered a budget surplus last year.
The largest deficit-to-GDP ratio was recorded by Ireland. However, the Irish government today questioned the 13.1% figure issued by Eurostat, which it said took into account government money used to bailout Allied Irish Banks and Irish Life & Permanent. Without this, the ‘underlying deficit’ last year was 9.4%, it said.
‘This compares very well to a target of 10.6% under the EU - IMF programme and the budget day estimate of 10.1%, especially giving the significant global slowdown in the second half of 2011,’ Irish finance minister Michael Noonan said in a statement.
Eurostat said it had a ‘specific reservation’ over this aspect of the data which could only be resolved when the restructuring of the two banks in question was completed.
Even removing the bailout cash from the figures, Ireland’s deficit-to-GDP ratio would still be the highest in the EU last year, ahead of Greece (9.1%), Spain (8.5%) and the UK (8.3%).
In terms of debt as a percentage of GDP, 14 EU member states recorded debt higher than their GDP last year. The list was topped by Greece (165.3% of GDP), with Italy (120.1%), Ireland (108.2%) and Portugal (107.8%) all also posting debt figures above the their economic output.
At the other end of the scale, Estonia (6%) posted the lowest debt-to-GDP ratio, followed by Bulgaria (16.3%) and Luxembourg (18.2%).
Among Europe’s largest economies, France posted the largest debt-to-GDP ratio (85.8%). Yesterday saw socialist Francois Hollande secure a clear lead over current incumbent Nicolas Sarkozy in the first round of voting in the French presidential election.
Hollande reportedly supports the renegotiation of the ‘fiscal compact’ signed earlier by the vast majority of EU member states to include a ‘growth clause’. He is also reported to be against austerity-focused financial policy.
The Netherlands was among the countries which saw its deficit as a percentage of GDP fall last year from 5.1% to 4.7% - but its ruling coalition was this morning understood to be close to collapse over plans to impose a further €16bn of spending cuts as it plans to further reduce this to 3% in 2013.
