BUDGETS: Euro-zone governments ran up a combined budget deficit of 1.3 per cent of output in 2001, more than wiping out the previous year's 0.2 per cent surplus as the economic slowdown dented tax takings and boosted spending.
The final figures could be even worse if the EU's statistics office decides that income from government securitisation cannot be included in public accounts, as five euro-zone countries, including the Republic, have done.
National breakdowns showed the largest deficit was racked up by Germany, Europe's largest economy, which escaped an official warning on its shortfall earlier this year after it promised to do its utmost to meet its self-imposed budget targets.
The German budget deficit was 2.7 per cent of output compared with a 1.2 per cent surplus in 2000. Europe's Stability and Growth Pact, which aims to safeguard monetary union, sets a limit for budget deficits of 3.0 per cent, after which a country risks fines.
Portugal reported a deficit of 2.2 per cent of output, while France and Italy, the euro zone's second- and third-biggest economies, both posted deficits of 1.4 per cent of their GDP.
The Italian deficit, as well as figures for Austria, Finland, Greece, and the Republic, could be revised depending on Eurostat's decision on government securitisation which is due by the beginning of July.
The EU statistics office also said yesterday it needed additional information to validate some debt and deficit figures. Greek debt levels will likely be higher than the provisional figures, while Austria's budget surplus would likely be lower, Eurostat said.
Euro-zone debt totalled 69.1 per cent of GDP, compared with 69.5 per cent in 2000.
The ratio fell in 2001 in all member-states, except Portugal and Sweden. Still, Italy and Belgium had debt levels above 100 per cent of output. - (Reuters)
