In 2010, the government deficit of the euro area (EA17) increased and that of the EU27 decreased in absolute terms compared with 2009, while the government debt and GDP rose in both zones. In the euro area the government deficit to GDP ratio decreased slightly from 6.4% in 2009 to 6.2% in 2010, and in the EU27 from 6.9% to 6.6%. In the euro area the government debt to GDP ratio increased from 79.8% at the end of 2009 to 85.4% at the end of 2010, and in the EU27 from 74.7% to 80.2%.

In 2010 the largest government deficits in percentage of GDP were recorded in Ireland (-31.3%), Greece (-10.6%), the United Kingdom (-10.3%), Portugal (-9.8%), Spain (-9.3%), Latvia (-8.3%), Poland (-7.8%), Slovakia (-7.7%), France (-7.1%), Lithuania (-7.0%) and Romania (-6.9%). The lowest deficits were recorded in Luxembourg (-1.1%), Finland (-2.5%) and Denmark (-2.6%). Estonia and Sweden (both 0.2%) registered a slight government surplus in 2010. In all, 21 Member States recorded an improvement in their government balance relative to GDP in 2010 compared with 2009, five a worsening and one remained unchanged.

At the end of 2010, the lowest ratios of government debt to GDP were recorded in Estonia (6.7%), Bulgaria (16.3%), Luxembourg (19.1%), Romania (31.0%), the Czech Republic (37.6%), Lithuania (38.0%), Slovenia (38.8%) and Sweden (39.7%). Fourteen Member States had government debt ratios higher than 60% of GDP in 2010: Greece (144.9%), Italy (118.4%), Belgium (96.2%), Ireland (94.9%), Portugal (93.3%), Germany (83.2%), France (82.3%), Hungary (81.3%), the United Kingdom (79.9%), Austria (71.8%), Malta (69.0%), the Netherlands (62.9%), Cyprus (61.5%) and Spain (61.0%).

In 2010, government expenditure in the euro area was equivalent to 50.9% of GDP and government revenue to 44.6%. The figures for the EU27 were 50.6% and 44.1% respectively. In both zones, the government expenditure ratio decreased slightly between 2009 and 2010, while the government revenue ratio remained almost unchanged.

Reservations on reported data

Romania: Eurostat has withdrawn the reservation expressed on the data reported by Romania in the April 2011 notification due to uncertainties on the impact of some public corporations on the government deficit, on the reporting of ESA95 categories “other accounts receivable and payable”, on the nature and impact of some financial transactions and on the consolidation of intra-governmental flows. Eurostat has confirmed that in the October 2011 notification the above mentioned items have been recorded according to ESA95 methodology and the related manuals.

United Kingdom: Eurostat has withdrawn the reservation expressed on the data reported by the United Kingdom in the April 2011 notification due to uncertainties on the time of recording of military expenditure. Eurostat has confirmed that in the October 2011 notification the United Kingdom included the necessary adjustment and is now recording military equipment expenditure on a delivery basis, as required by the relevant Eurostat decision of 9 March 2006.

Amendment by Eurostat to reported data

United Kingdom: In the October 2011 notification the United Kingdom has recorded the proceeds from the sale of UMTS licences of 2000 according to the relevant Eurostat decision of 14 July 2000. Therefore Eurostat has not amended the deficit and debt data notified by the United Kingdom in this respect.

United Kingdom: Eurostat has amended the deficit and debt data notified by the United Kingdom for the years 2008 to 2010 (as well as for financial years 2008/2009 to 2010/2011). This has been done to ensure compliance with the Eurostat guidance note of 16 March 2011 on financial defeasance structures, with respect to Bradford & Bingley (B&B) and Northern Rock Asset Management (NRAM). The reported deficit figures have been increased by 360 mn GBP (0.03% of GDP) in 2008 (as well as in financial year 2008/2009), by 571 mn GBP (0.04% of GDP) in 2009 (as well as in financial year 2009/2010) and by 1 023 mn GBP (0.07% of GDP) in 2010 (as well as in financial year 2010/2011). The reported debt figures are increased by 32 374 mn GBP (2.26% of GDP) in 2008 (as well as in financial year 2008/2009), by 19 969 mn GBP (1.43% of GDP) in 2009 (as well as in financial year 2009/2010) and by 56 821 mn GBP (3.90% of GDP) in 2010 (as well as in financial year 2010/2011).

Other issues

i. Financial defeasance structures

A number of governments have been confronted in 2010 with the consequences of the banking crisis, and the necessity of dealing with impaired assets. In some cases this has led to the establishment of specific public financial defeasance structures, with significant support of government. This was particularly the case for Denmark, Germany, Ireland, Latvia, Austria, Portugal, and the United Kingdom.

ii. Intergovernmental lending

For the purpose of proper consolidation of general government debt in European aggregates and to provide users with information, Eurostat is now collecting and publishing data on government loans to other EU governments. For 2010 the intergovernmental lending figures relate mainly to lending to Greece.

In this statement Eurostat, the statistical office of the European Union, is providing government deficit and debt data based on figures reported in the second 2011 notification by EU Member States for the years 2007-2010, for the application of the excessive deficit procedure (EDP). This notification is based on the ESA95 system of national accounts. This statement also includes data on government expenditure and revenue and an annex with the main revisions since the April 2011.

Permalink: Euro area & EU27 government deficit 6.2% and 6.6%