Government finance statistics - quarterly data

Data extracted on 22 July 2020.

Planned article update: October 2020.

Highlights


In the first quarter of 2020, the seasonally adjusted general government deficit to GDP ratio increased sharply to 2.2% in the euro area and 2.3% in the EU - the highest deficit recorded in the euro area since the second quarter of 2015.

At the end of the first quarter of 2020, the quarter in which COVID-19 containment measures began to be widely introduced by Member States, the government debt to GDP ratio in the euro area increased to 86.3%.

The highest ratios of government debt to GDP at the end of the first quarter of 2020 were recorded in Greece (176.7%), Italy (137.6%), Portugal (120.0%), Belgium (104.4%) and France (101.2%).

EU and euro area quarterly net lending (+)/ net borrowing (-), % of GDP, seasonally adjusted data
Source: Eurostat (gov_10q_ggnfa)

In recent years, Eurostat has significantly expanded the range of integrated quarterly data on government finance statistics available, providing a timely and increasingly high quality picture of the evolution of government finances in the European Union (EU). The data presented in this article reflect both non-financial and financial (quarterly non-financial and financial accounts for general government transactions and cover all European Union (EU-27) countries as well as the United Kingdom, Iceland, Norway and Switzerland.

This article is based on data transmitted to Eurostat at the end of June 2020, which includes data coverage of the first quarter of 2020, and follow ESA 2010 methodology. It is supplemented by non-financial seasonally adjusted data estimated provided on a voluntary basis by EU and EFTA countries' National Statistical Institutes. Eurostat regularly publishes seasonally adjusted and working day adjusted quarterly data on government revenue, expenditure and surplus (+)/ deficit (-), currently for twenty-one Member States, the United Kingdom, Switzerland and the EU aggregates.

In the first quarter of 2020, when COVID-19 containment measures began to be widely introduced by Member States, the seasonally adjusted general government deficit to GDP ratio stood at -2.2 % in the euro area and -2.3 % in the EU. This is a sharp increase in both areas in comparison with the fourth quarter of 2019 and the highest deficit recorded in the euro area since the second quarter of 2015.

Full article


Quarterly non-financial accounts for general government

Government revenue and expenditure

Both total revenue and expenditure exhibit a clear seasonality. In order to interpret trends for the most recent quarters, seasonally adjusted data is presented in addition to the raw data transmitted by EU Member States (see explanation below).

In the first quarter of 2020, seasonally adjusted total government revenue in the euro area amounted to 47.0 % of GDP, an increase compared with 46.4 % of GDP in the fourth quarter of 2019. Total government expenditure in the euro area stood at 49.2 % of GDP, a significant increase compared with 47.1 % of GDP in the previous quarter.

In the EU, total government revenue was 46.3 % of GDP in the first quarter of 2020, an increase compared to 46.0 % of GDP in the previous quarter. This increase as a percentage of GDP is due to a stronger decrease in GDP than the decrease in total revenue. In the first quarter of 2020, seasonally adjusted total revenue in the EU decreased by around EUR 35 billion compared with the fourth quarter of 2019. Total government expenditure in the EU was 48.6 % of GDP, an increase compared with 46.7 % of GDP in the previous quarter.

Figure 2: Euro area total revenue and total expenditure, seasonally adjusted and non-adjusted data, billion euro
Source: Eurostat (gov_10q_ggnfa)


Figure 3: Euro area total revenue and total expenditure, seasonally adjusted and non-adjusted data, % of GDP
Source: Eurostat (gov_10q_ggnfa)

From the third quarter of 2010 onwards, a decreasing trend in the level of the total expenditure-to-GDP ratio is visible, reflecting an absolute decrease in total expenditure in the fourth quarter of 2010 and the first quarter of 2011 as well as the effects of renewed economic growth in the EU and the euro area (all seasonally adjusted). In the fourth quarter of 2012 and in the second quarter of 2013, total expenditure increased slightly in both areas, influenced by interventions to support the banking sector in several Member States, notably in Spain in the fourth quarter of 2012 and in Greece in the second quarter of 2013. Supports for the banking sector in several Member States are also the main reason for the increase in the fourth quarter of 2015. The decreasing trend was broken in the first quarter of 2020 in which the Member States began to introduce COVID-19 containment expenditure measures, and strong decreases in total revenue and increases in total expenditure are observed.

Table 1: EA-19 and EU-27 quarterly net lending (+)/ net borrowing (-), total expenditure and total revenue as a percentage of GDP, seasonally adjusted data
Source: Eurostat (gov_10q_ggnfa), seasonally adjusted data: Eurostat and National Statistical Institutes estimates


Table 2: Quarterly net lending (+)/ net borrowing (-) as a percentage of GDP, seasonally adjusted data
Source: Eurostat (gov_10q_ggnfa), seasonally adjusted data: National Statistical Institute estimates


Table 3: Quarterly net lending (+)/ net borrowing (-) by country, non-seasonally adjusted data
Source: Eurostat (gov_10q_ggnfa)

General government deficit

The difference between general government total revenue and total expenditure is known in ESA 2010 terminology as general government net lending (+)/ net borrowing (-) (ESA 2010 category B.9) and is usually referred to as government deficit (or surplus). This figure is an important indicator of the overall situation of government finances. It is usually expressed as a percentage of GDP.

In the first quarter of 2020, the seasonally adjusted general government deficit to GDP ratio stood at -2.2 % in the euro area and -2.3% in the EU. This is a sharp increase in both areas in comparison with the fourth quarter of 2019 and the highest deficit recorded in the euro area since the second quarter of 2015.

The lowest deficit to GDP ratio in the available time series occurred in the first quarter of 2018 in both the euro area and the EU, when the deficit stood at -0.2 % of GDP in both areas.

Due to the economic and financial crisis, which started in 2008, government's deficits steadily deteriorated and reached 7.1 % of GDP (seasonally adjusted) in the third quarter of 2010 for the euro area and 6.7 % of GDP (seasonally adjusted) in the first quarter of 2010 for the EU. The beginning of the consolidation of public finances which can be observed from the fourth quarter of 2010 onwards is due to a reduction in government expenditure in terms of GDP, as well as continued growth in absolute revenue (seasonally adjusted absolute numbers), which outpaced the growth in GDP. From the fourth quarter of 2010 onwards, the seasonally adjusted general government deficit no longer exceeded 5 % of GDP in both the euro area and EU. However, from the first quarter of 2011 onwards, general government total expenditure (seasonally adjusted) resumed growth when measured in absolute terms in both the euro area and EU. From the fourth quarter of 2013 onwards, the seasonally adjusted general government deficit remained below 3 % in the euro area and the EU.

In the first quarter of 2020, seasonally adjusted government deficit rose sharply to 2.2 % of GDP in the euro area and up to 2.3 % of GDP in the EU.

In the first quarter of 2020, increases in the deficit or decreases in the surplus are noted for all Member States due to COVID-19 measures.

The main part of government revenues are taxes and social contributions. During economic downturns, tax revenue and social contribution revenue decrease even in the absence of fiscal policy changes. This is because the underlying tax bases decrease. In the first quarter of 2020, decreases in the government total revenue are observed. In the euro area, seasonally adjusted government total revenue decreased by EUR 26 billion compared to the fourth quarter of 2019.

In the first quarter of 2020, a number of countries set up or expanded specific (expenditure) measures in order to mitigate the economic downturn caused by the COVID-19 pandemic. This, as well as an increased use of existing (social security) schemes explain the increase in seasonally adjusted total expenditure compared with the fourth quarter of 2019.

In Eurobase, seasonally adjusted and calendar day adjusted total revenue and total expenditure data of Member States and EFTA countries, which provide seasonally adjusted and calendar day adjusted data for total revenue, total expenditure and net lending (+)/ net borrowing (-) in addition to the non-seasonally adjusted data, is presented in full detail. This data is provided on a voluntary basis by the National Statistical Institutes.

Figure 4: EA-19 net lending, net borrowing, seasonally adjusted and non-adjusted data, % of GDP and billion euro
Source: Eurostat (gov_10q_ggnfa)


Figure 5: EU components of general government total revenue, billion euro
Source: Eurostat (gov_10q_ggnfa)


Figure 6: EU components of general government total expenditure, billion euro
Source: Eurostat (gov_10q_ggnfa)

Quarterly financial accounts for general government

Financial transactions - assets, liabilities and net financial transactions

The government financial accounts notably allow for an analysis of how governments finance their deficits or use their surpluses to either reduce their liabilities or acquire financial assets. They include data on financial transactions (net acquisition of financial assets and the net incurrence of financial liabilities) and balance sheet items (stocks of financial assets and liabilities outstanding at the end of each quarter) for general government and its sub-sectors. Variations in stocks are explained both by the transactions and by other factors such as holding gains and losses and other changes in volume. The aim of this section is to present the main characteristics of the general government financial accounts.

From the fourth quarter of 2008 onwards, the fluctuation of transactions in both assets and liabilities has increased sharply due to the economic and financial crisis. The gap between the volume of transactions in assets and liabilities has widened sharply, giving rise to increasing negative figures in net financial transactions (B.9f), which is interpreted as the government deficit/ surplus derived from financial accounts. Contrary to the government deficit/ surplus, net financial transactions are not seasonally adjusted. The increase and peaks in transactions in financial assets can be explained by governments having acquired assets to support financial institutions. The worsening economic climate also led to an increase in government total expenditure, while revenue decreased. For these reasons, governments also needed to incur liabilities.

Figure 7: EU-27 net financial transactions, transactions in assets and liabilities, billion euro
Source: Eurostat (gov_10q_ggfa)


Net financial transactions continued to deteriorate steadily from the second quarter of 2008 to the first quarter of 2010 for the euro area and the EU. From the first quarter of 2010 until the first quarter of 2018 onwards an improvement was visible. In the first quarter of 2020 net financial transactions started to worsen due to higher growth of liabilities compared to assets.

Figure 8: EA-19 net financial transactions, transactions in assets and liabilities, billion euro
Source: Eurostat (gov_10q_ggfa)

Government financial balance sheet

At the level of the EU and euro area, a significant rise in the stocks of liabilities has been observed since the fourth quarter of 2008, together with an increase in assets which was less pronounced. The rise in the stock of liabilities is mainly due to debt securities, which are by far the most important financial instrument on the government liability side. The stock of loan liabilities also increased substantially. The remainder of financial liabilities is mainly 'other accounts, payable'.

Figure 9: EU net financial worth, stock of assets and liabilities, billion euro and % of GDP
Source: Eurostat (gov_10q_ggfa)


Figure 10: EA-19 net financial worth, stock of assets and liabilities, billion euro and % of GDP
Source: Eurostat (gov_10q_ggfa)

The stock of financial assets is mainly held in equity and investment fund shares (for example public corporations), with other accounts receivable, currency and deposits (these exhibit a strong seasonality), loans and debt securities also making up important parts. Loans increased substantially during the financial crisis.

Figure 11: EU stock of assets by financial instrument, % of GDP
Source: Eurostat (gov_10q_ggfa)


Figure 12: EA-19 stock of assets by financial instrument, % of GDP
Source: Eurostat (gov_10q_ggfa)

The difference between the stock of financial assets and liabilities is the balancing item net financial worth.

Figure 13: Evolution of net financial worth by country, % of GDP
Source: Eurostat (gov_10q_ggfa)

Compared with the first quarter of 2019, the first quarter of 2020 shows a significant deterioration of the balancing item net financial worth for the EU. In the first quarter of 2020, net financial worth stood at -57.1 % of GDP, while in the first quarter of 2019, net financial worth stood at -56.1 % of GDP. The stock of financial assets stood at 41.1 % of GDP (decrease compared with 41.4 % of GDP in the first quarter of 2019), while the stock of liabilities increased from 97.5 % of GDP to 98.2 % of GDP. The stock of financial assets and liabilities changes due to financial transactions as well to 'other flows' such as revaluations. In recent quarters, government debt securities (liabilities) have notably increased in value in many EU countries, driven by declining interest rates. This affects negatively net financial worth. In the latest quarter of 2019, however, a decrease in the value of debt securities positively impacted net financial worth.

Figure 14: EU stock of liabilities by financial instrument, % of GDP
Source: Eurostat (gov_10q_ggfa)


Figure 15: EA-19 stock of liabilities by financial instrument, % of GDP
Source: Eurostat (gov_10q_ggfa)

Quarterly gross debt for general government

At the end of the first quarter of 2020, the quarter in which COVID-19 containment measures began to be widely introduced by Member States, the government debt to GDP ratio in the euro area stood at 86.3 %, compared with 84.1 % at the end of the fourth quarter of 2019. In the EU, the ratio increased from 77.7 % to 79.5 %. The impacts of the containment measures as well as policy responses to the containment measures are expected to materialise fully in increased financing needs only in the second quarter of 2020.

The highest ratios of government debt to GDP at the end of the first quarter of 2020 were recorded in Greece (176.7 %), Italy (137.6 %), Portugal (120.0 %), Belgium (104.4 %) and France (101.2 %) and the lowest in Estonia (8.9 %), Bulgaria (20.3 %) and Luxembourg (22.3 %).

Figure 16: General government gross debt, % of GDP, 2020Q1
Source: Eurostat (gov_10q_ggdebt)


Compared with the fourth quarter of 2019, 24 Member States registered an increase in their debt to GDP ratio at the end of the first quarter of 2020 and three a decrease. The largest increases in the ratio were observed in Belgium (+5.7 percentage points – pp), Finland (+4.9 pp), Slovenia (+3.5 pp), Spain (+3.4 pp) and France (+3.1 pp). The largest decrease was recorded in Lithuania ( 3.0 pp).

Figure 17: Change in general government gross debt, percentage points of GDP, 2020Q1 compared to the previous quarter
Source: Eurostat (gov_10q_ggdebt)


Compared with the first quarter 2019, ten Member States registered an increase in their debt to GDP ratio at the end of the first quarter of 2020 and sixteen a decrease, while in Slovakia the ratio remained stable. The largest increases in the ratio were recorded in Finland (+4.7 pp) and Romania (+3.6 pp), while the largest decreases were recorded in Ireland (-5.6 pp), Cyprus and Greece (both -5.3 pp) as well as Portugal (-3.4 pp). For Cyprus, the decrease of debt in the third quarter of 2019 is driven by the repayment of foreign sovereign loans.

Figure 18: Change in general government gross debt, percentage points of GDP, 2020Q1 compared to the same quarter of the previous year
Source: Eurostat (gov_10q_ggdebt)

Evolution of deficit and debt

Figure 19 shows some of the most important links between the quarterly deficit and the quarterly debt for the euro area. While in general, government gross debt will increase in the presence of a government deficit, this is not necessarily the case in the short-term. It can be seen, that a strong co-movement of net acquisition of financial assets exists with the evolution of quarterly debt. Incurrence of liabilities not in the quarterly government debt (mainly 'other accounts, payable') plays a smaller role.

Figure 19: EA-19 evolution of general government deficit and debt, percentage of GDP
Source: Eurostat (gov_10q_ggdebt)

Since the fourth quarter of 2017, for the euro area, the link between the deficit and the gross debt is mainly explained by net acquisition of financial assets. In the first quarter of 2020 this is no longer the case as deficits (non-seasonally adjusted) started increasing because COVID-19 containment measures were introduced by the Member States. Around half of the increase in debt in the first quarter of 2020 can be attributed to financing the deficit, while roughly the other half is due to the net acquisition of financial assets. In the first quarter of 2020 these financial assets included other accounts receivable related to the deferral of taxes and social contributions that were accrued but not paid. Such deferral schemes were widely introduced by Member States to mitigate the adverse economic impact of the COVID-19 pandemic.

Data sources

Please refer to the country notes on Eurostat's metadata (ESMS) for more important information at country level.

The first quarter of 2020 is the quarter in which the Member States began to introduce COVID-19 containment measures. The policy measures with the largest impact on the government accounts in the first quarter of 2020 were related to taxes (tax exemptions, postponement of payment deadlines) and to expenditure measures to support employment and businesses. Country specific explanatory metadata is published. Further harmonisation is expected as regards recording practices for the expenditure measures introduced, as well as for accruals of deferred taxes. Revisions in the coming quarters are thus expected to be larger than usual. As a consequence, Eurostat has flagged all data for the first quarter of 2020 as provisional.

Gross domestic product

Throughout this publication, gross domestic product (GDP) at current prices (nominal) is used, either using the non-seasonally adjusted or the seasonally and calendar adjusted forms as appropriate.

Context

Quarterly accounts of general government

Eurostat releases quarterly flow and stock data for the general government sector, using an integrated structure which combines the data from quarterly non-financial accounts for general government (QNFAGG), quarterly financial accounts for general government (QFAGG) and quarterly government debt (QGD). An integrated publication combining data from all three tables is released quarterly on the dedicated Government Finance Statistics (GFS) section of the Eurostat web site.

Data is transmitted according to the ESA 2010 transmission programme for QFAGG and QDEBT. QNFAGG data is transmitted under gentlemen's agreement.

ESA 2010

Eurostat publishes quarterly government finance statistics figures based on the European System of Accounts 2010 (ESA 2010) methodology.

General government

QNFAGG and QFAGG and QDEBT statistics cover data for general government as defined in ESA2010, paragraph 2.111.

Seasonal adjustment of selected data series

Quarterly government finance statistics are reported to Eurostat in the form of non-seasonally adjusted (raw) figures. However, a certain number of the reported series contain seasonal patterns (explained by the link with the seasonality of economic activity and by the budgetary planning and accounting practices of national governments), which make it difficult to carry out a direct meaningful cross-country and time series analysis using non-adjusted data. The same is true for GDP, which reflects the seasonal pattern of all economic activities in the economy.

To overcome this difficulty and thus to gain a better understanding of trends in addition to the non-seasonally adjusted data, seasonally adjusted data is presented for the EU and euro area in this article. The seasonal adjustment aims to remove the seasonality linked to this quarterly data.

It should be noted that annualised seasonally adjusted data is not in general equal to annualised non-adjusted data. When using annualised figures, it is more appropriate to use non-seasonally adjusted data. Using seasonally adjusted data is more appropriate when looking at quarter-on-quarter growth rates.

The seasonal adjustment for total revenue and total expenditure is done using an indirect procedure (at country level) using Tramo-Seats on Demetra+). Where available, National Statistical Institutes own estimates are used as input for the aggregates, which are supplied to Eurostat on a gentlemen's agreement basis. Some country level estimates as well as data for the EU aggregates are published on Eurobase. These estimates are supplemented by Eurostat's own estimates for those countries, which do not yet supply their own estimate. This data is labelled confidential and not published.

Net lending (+)/ net borrowing (-) is derived indirectly from the accounting identity: Net lending (+)/ net borrowing (-)= total revenue - total expenditure.

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Annual government finance statistics (t_gov_10a)
Government deficit and debt (t_gov_10dd)
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