This article examines how key government finance indicators have developed in the European Union (EU) and the euro area (EA-18). Specifically, it considers public (general government) deficits, general government gross debt, the revenue and expenditure of general government, as well as taxes and social contributions, which are the main sources of government revenue.
These statistics are crucial indicators for determining the health of a Member State’s economy. Under the terms of the EU’s stability and growth pact (SGP), EU Member States pledged to keep their deficits and debt below certain limits: a Member State’s government deficit may not exceed -3 % of its gross domestic product (GDP), while its debt may not exceed 60 % of GDP. If a Member State does not respect these limits, the so-called excessive deficit procedure is triggered. This entails several steps — including the possibility of sanctions — to encourage the Member State concerned to take appropriate measures to rectify the situation. The same deficit and debt limits are also criteria for economic and monetary union (EMU) and hence for joining the euro. Furthermore, the latest revision of the integrated economic and employment guidelines (revised as part of the Europe 2020 strategy for smart, sustainable and inclusive growth) includes a guideline to ensure the quality and the sustainability of public finances.
Main statistical findings
In 2013, the government deficit (net borrowing of the consolidated general government sector, as a share of GDP) of both the EU-28 and the euro area (EA-18) decreased compared with 2012, while general government debt increased (both relative to GDP and in absolute terms).
In the EU-28 the government deficit-to-GDP ratio decreased from -4.2 % in 2012 to -3.2 % in 2013 and in the euro area (EA-18) it decreased from -3.6 % to -2.9 %. Luxembourg and Germany registered small government surpluses in 2013. There were 16 EU Member States, namely Belgium, Bulgaria, the Czech Republic, Denmark, Estonia, Italy, Latvia, Lithuania, Hungary, Malta, the Netherlands, Austria, Romania, Slovakia, Finland and Sweden, which recorded deficits in 2013 that were not greater than -3.0 % of GDP (see Figure 1).