ECONOMY

Eurozone 2007 deficit and debt fall on the whole, but French see increases

BRUSSELS (Reuters) – Eurozone government deficit more than halved last year and debt fell too, data showed yesterday, with all countries sharing the single currency below the European Union ceiling of 3 percent of gross domestic product. Government deficit in the 15 countries now using the euro fell to 0.6 percent of GDP in 2007 from 1.3 percent in 2006 and debt declined to 66.3 percent from 68.4 percent. «This is the best figure ever,» European Commission spokeswoman Amelia Torres told a news briefing, referring to the deficit. «This result demonstrates that the Stability and Growth Pact is working.» The pact lays out EU budget rules, setting a ceiling of 3 percent of GDP for budget deficits and 60 percent of GDP for debt. Germany, the eurozone’s biggest economy, made the biggest deficit cut of 1.6 percentage points, bringing its public finances into balance well ahead of a 2010 deadline agreed by eurozone finance ministers. Italy slashed its shortfall by 1.5 percentage points to 1.9 percent of GDP in 2007 and Portugal reduced its deficit by 1.3 percentage points to 2.6 percent. European Union Economic and Monetary Affairs Commissioner Joaquin Almunia said this week that as a result of these improvements the European Commission would propose on May 7 an end to EU disciplinary budget action against Rome and Lisbon. But the French deficit increased to 2.7 percent from 2.4 percent despite government plans to cut it to 2.3 percent. Public debt in France, the eurozone’s second-biggest economy, rose to 64.2 percent from 63.6 percent. In the whole European Union of 27 countries, government deficit fell to 0.9 percent of GDP from 1.4 percent and debt dipped to 58.7 percent from 61.2 percent. Hungary was the only EU member with a deficit higher than the bloc’s 3 percent ceiling and thus the only country likely to remain under the EU’s disciplinary budget procedure. Nevertheless, Hungary’s deficit fell to 5.5 percent of GDP last year from 9.2 percent in 2006. The data showed the Commission should also end the disciplinary procedure against Poland, the biggest of the 12 mostly ex-communist countries that joined the EU in 2004 and 2007, and Slovakia. Estonia and Bulgaria kept budget surpluses.