By Nick Mann | 22 April 2013

The combined deficit of European Union member states fell last year, but aggregate debt levels continued to increase, according to figures published by Eurostat today.

Between them, the 27 EU countries recorded a budget deficit equivalent to 4% of their gross domestic product in 2012, down from 4.4% in 2011 and 6.5% in 2010. This picture was mirrored in the eurozone, where the combined deficit was 3.7%, an improvement on the 4.2% recorded in 2011 and 6.2% posted in 2010.

Germany was the only EU country to finish last year in the black, posting a budget surplus equal to 0.2% of its GDP. Low deficits were recorded by Estonia (-0.3%), Sweden (-0.5%), Bulgaria (-0.8%) and Luxembourg (-0.8%).

However, 17 EU member states had a deficit in excess of 3% of their GDP – the threshold above which they can, in the case of eurozone member countries, eventually be subject to EU fines unless they take action to reduce their deficit.

Of these, the highest deficit was recorded by Spain (-10.6%), followed by Greece (-10%), Ireland (-7.6%), Portugal (-6.4%), Cyprus (-6.3%) and the UK (-6.3%).

In all, 13 EU countries posted an improved budget balance relative to their GDP last year, 12 saw their financial position worsen and two remained stable.

In terms of debt, the EU’s overall debt-to-GDP ratio increased to 85.3% last year, up from 82.5% in 2011. This means EU-wide debt as a percentage of GDP has increased by over 10 percentage points since the peak of the global economic crisis in 2009.

The highest debt levels continue to found in the eurozone, where the aggregate debt to GDP ratio reached 90.6% last year, up from 87.3% the previous year.

The single currency bloc was also home to the most indebted countries, with Greece (156.9% of GDP), Italy (127%), Portugal (123.6%) and Ireland (117.6%) all posting debt levels in excess of the value of their economic output last year.

Just six EU member states achieved an improvement in their debt-to-GDP ratios last year, while 21 saw them worsen.