18 Apr 2008 09:00 GMT - DJ EU 2007 Avg Govt Budget Deficit 0.9% Of GDP Vs 1.4% In 2006
BRUSSELS (Dow Jones)--Government budget deficits and debt levels are falling across the European Union, showing the bloc's determination to maintain fiscal discipline despite slower economic growth.
Government budget deficits across the 27-state region averaged 0.9% of gross domestic product in 2007, down from 1.4% in 2006, data published Friday by Eurostat, the E.U.'s statistics agency, showed. For the 15 countries that share the euro, average government budget deficits fell to 0.6% of GDP in 2007 from 1.3% in 2006.
E.U. rules require countries to keep their budget deficits below 3% of GDP. Euro-zone countries are trying to be even more cautious - they agreed last year to balance their budgets by 2010.
France has balked at this arrangement, saying governments should cut taxes and increase spending to power the economy through a downturn. U.S. policymakers have embraced this approach, launching a $168 billion fiscal-stimulus package earlier this year.
E.U. rules also require countries to keep their total debt levels below 60% of GDP. Across the E.U. in 2007, the average debt level fell to 58.7% of GDP in 2007 from 61.2% in 2006. In the euro zone, that level fell to 66.3% from 68.4% over the same period.
Hungary maintained its status as the E.U.'s worst budget offender in 2007, posting a deficit of 5.5% of GDP. The country's fiscal position did improve on the previous year, when its budget gap was 9.2% of GDP.
Among the E.U.'s largest economies, France posted a budget deficit of 2.7% of GDP last year. The U.K.'s deficit level was 2.9% of GDP and Germany had a balanced budget. Italy, which breached the 3% limit in 2006, reduced its budget deficit to 1.9% of GDP in 2007.
The European Commission, the E.U.'s executive arm, has been scrutinizing Italy's public finances under the bloc's excessive deficit rules. The commission has said it will give the government a clean bill of health when it presents a report May 7. The commission will also praise Portugal, which reduced its budget deficit to 2.6% of GDP in 2007 from 3.9% of GDP in 2006.
-By Adam Cohen, Dow Jones Newswires; +322 741 1486; adam.cohen@dowjones.com |
