By Judith Ugwumadu | 23 April 2014

Public finances in the eurozone improved in 2013, according to official figures published today, showing that European deficit reduction programmes were making gradual progress.

Eurostat, the statistical office of the European Union, revealed that overall government deficits across the eurozone fell to €293bn, equivalent to 3.0% of gross domestic product. This was down from the €352bn deficit recorded in 2012, equivalent to 3.7% of GDP. 

The deficit across the eurozone is now in line with the top end of the 3% deficit limit set out in the European Commission’s Stability and Growth Pact.

The deficit also fell across the wider EU from €511bn (3.9% of GDP) in 2012 to €437bn (3.3% of GDP).

However, the data showed wide variations across the regions as some countries borrowed more than the 3% limit and government debt continued to mount.

Eurostat revealed that both the eurozone and EU28 were affected by growing debt. In the eurozone area the government debt-to-GDP ratio increased from 90.7% at the end of 2012 to 92.6% at the end of last year, and in the wider EU this jumped from 85.2% to 87.1%.

Looking at specific countries, Luxembourg managed to register a small +0.1% surplus, while Germany performed the best with its public finances close to balance with no new borrowing.

But ten member states had deficits higher than 3% of GDP. Slovenia (-14.7%), Greece (-12.7%), Spain (-7.1%), Ireland (-7.2%) and the UK (-5.8%) ran the largest deficits.  Cyprus, Croatia, Portugal, France and Poland were also in excess of the 3% target.

On debt, the countries with the lowest ratios of debt to GDP were Estonia (10.0%), Luxembourg (23.1%), and Bulgaria (18.9%). Sixteen EU member states had government debt ratios higher than the 60% of GDP set out in the Stability and Growth Pact. These included Greece (175.1%), Italy (132.6%) and Portugal (129.0 %).