The euro zone tames government deficit but debt rises

In 2011, the government deficit of both the euro area and the wider European Union decreased in absolute terms compared with 2010. Yet, government debt rose in both zones.

According to a data release from Eurostat, in the euro area, government deficit to GDP ratio fell from 6.2% in 2010 to 4.1% in 2011, and in the EU from 6.5% to 4.4%. In the euro area the government debt to GDP ratio increased from 85.4% at the end of 2010 to 87.3% at the end of 2011, and so it did in the EU from 80.0% to 82.5%.

In 2011 the lowest government deficits relative to GDP were recorded in Luxembourg (-0.3%), Finland (-0.6%) and Germany (-0.8%), while Hungary (+4.3%), Estonia (+1.1%) and Sweden (+0.4%) registered surpluses.

Seventeen Member States had deficits higher than 3% of GDP: Ireland (-13.4%), Greece and Spain (both -9.4%), the United Kingdom (-7.8%), Slovenia (-6.4%), Cyprus (-6.3%), Lithuania and Romania (both -5.5%), France (-5.2%), Poland (-5.0%), Slovakia (-4.9%), the Netherlands (-4.5%), Portugal (-4.4%), Italy (-3.9%), Belgium (-3.7%), Latvia (-3.4%) and the Czech Republic (-3.3%).

In all, 25 Member States recorded an improvement in their government balance relative to GDP in 2011 compared with 2010 and two a worsening.

At the end of 2011, the lowest ratios of government debt to GDP were recorded in Estonia (6.1%), Bulgaria (16.3%), Luxembourg (18.3%),Romania (33.4%), Sweden (38.4%) and Lithuania (38.5%).

Fourteen Member States had government debt ratios higher than 60% of GDP: Greece (170.6%), Italy (120.7%), Portugal (108.1%), Ireland (106.4%), Belgium (97.8%), France (86.0%), the United Kingdom (85.0%), Hungary(81.4%), Germany (80.5%), Austria (72.4%), Cyprus (71.1%), Malta (70.9%), Spain (69.3%) and the Netherlands (65.5%). In all, six Member States recorded an improvement in their government debt relative to GDP in 2011 compared with 2010 and 21 a worsening.

In 2011, government expenditure in the euro area was equivalent to 49.5% of GDP and government revenue to 45.4%. The figures for the EU were 49.1% and 44.7% respectively. In both zones, the government expenditure ratio decreased between 2010 and 2011, while the government revenue ratio increased.