Thursday

30th Mar 2017

Revised Greek deficit figures cause outrage

Senior EU financial personalities expressed deep concern, bordering on amazement, on Monday night (19 October) over recently revised Greek deficit forecasts.

At a Luxembourg meeting of the euro area's 16 finance ministers, Greek minister George Papaconstantinou from the newly elected Socialist government gave a presentation on his country's shaky situation.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

Forecasts released earlier this year by the former centre-right government predicted a deficit of 3.7 percent of GDP for 2009. But new figures released by the country's central bank now say it is more likely to exceed 10 percent of GDP, and could hit 12 percent.

"I have to say that I am very impressed by the difference between the old and the new figures," said the meeting's chairman, Jean-Claude Juncker, with characteristically dry sense of humour.

"It happens occasionally but if it happens again we risk putting all Eurostat data at risk of credibility," he added more seriously.

Greek deficit forecasts made by Eurostat – the EU's statistic's office – have also been off the mark due to the poor quality of information provided to them by the southeastern European country.

The EU's economy commissioner, Joaquin Almunia, was straight to the point in the news conference after the meeting.

"We want to know what has happened and why it has happened," he said, indicating that the commission, Eurostat and the Greek statistics office would be getting together shortly to discuss the issue.

"Serious discrepancies will require an open and deep investigation," he added.

Large states told to respect budget pact

While one of Europe's big spenders was given a thorough chastising, France and Germany were also told to get their finances in order.

EU economies are bound by the Stability and Growth Pact which limits budget deficits to three percent of GDP. However a 2005 revision of the pact allows government's to exceed this level under exceptional circumstances, an alteration they have taken full advantage of in the current climate.

Twenty of the EU's 27 members have now been the subject of some form of deficit action from the European Commission, meaning a report with a timetable to bring deficits down.

France expects its overall public deficit to reach 8.2 percent of GDP in 2009, rising to 8.5 percent in 2010. Germany - the euro area's biggest economy - expects its deficit to swell from 3.7 percent of GDP this year to 6 percent in 2010.

Mr Juncker said smaller member states would have great difficulty in explaining to their citizens why spending cuts and tax rises were needed to bring deficits down, if their bigger neighbours did not take similar action.

Jean-Claude Trichet, president of the European Central Bank, agreed. "France and Germany have to be treated in the same fashion," he said.

Euro area finance ministers now agree that exit strategies to end the current stimulus measures should commence in 2011, assuming commission figures out next month point to economic recovery in 2010.

The precondition is that any forecast euro area growth is based on normal economic drivers and not the current stimulus spending which is inflating demand.

Once that condition is met, budget consolidation through spending cuts and tax rises will need to exceed the normal 0.5 percent of GDP warned Mr Juncker, while Mr Almunia indicated that for several member states the process will need to start before 2011.

Commission stops German-British stock merger

The decision to block the merger of the London Stock Exchange and Deutsche Boerse was expected, as negotiations between the parties broke down a few weeks ago.

SMEs lack support in EU financial plan

The European Commission's plan for a capital markets union is said to be aimed at small and medium-sized enterprises, but many could end up being left out in the cold.

Eurozone chief in 'drinks and women' row

[Updated] The Netherlands' Jeroen Dijsselbloem faces calls for resignation after saying that crisis-hit countries in southern Europe spent "money on drinks and women" before being helped by others.

Stolen Russian billions ended up in EU states

Illicit money flowing out of Russia ended up in almost every single EU state, an investigation has found, posing questions on the integrity of Europe’s banking systems.

News in Brief

  1. UK publishes 'Great Repeal Bill' plan to replace EU laws
  2. Scots share May's vision for Brexit deal, survey says
  3. Coalition talks leader expects Dutch government by summer
  4. EU commission allows ex-member Hill to join law firm
  5. Reuters: Greece and lenders move closer to deal
  6. Italy: Le Pen win would mean 'permanent political risk'
  7. Danish parliament misinformed on Nord Stream 1
  8. UK delivered its Article 50 letter to the EU

Stakeholders' Highlights

  1. Malta EU 2017Green Light Given for New EU Regulation to Bolster External Border Checks
  2. The Idealist QuarterlyCan Progressive Stories Survive Our Post-Truth Era? After-Work Discussion on 6 April
  3. ACCAG20 Citizens Want 'Big Picture' Tax Policymaking, According to Global Survey
  4. Belgrade Security ForumCall for Papers: European Union as a Global Crisis Manager - Deadline 30 April
  5. European Gaming & Betting Association60 Years Rome Treaty – 60 Years Building an Internal Market
  6. Malta EU 2017New EU Rules to Prevent Terrorism and Give More Rights to Victims Approved
  7. European Jewish Congress"Extremists Still Have Ability and Motivation to Murder in Europe" Says EJC President
  8. European Gaming & Betting AssociationAudiovisual Media Services Directive to Exclude Minors from Gambling Ads
  9. ILGA-EuropeTime for a Reality Check on International Day for the Elimination of Racial Discrimination
  10. UNICEFHuman Cost to Refugee and Migrant Children Mounts Up One Year After EU-Turkey Deal
  11. Malta EU 2017Council Adopts New Rules to Improve Safety of Medical Devices
  12. Nordic Council of MinistersNordic Energy Research: How to Reach 100 Percent Renewable Energy

Latest News

  1. Hungary attempts to stifle Soros-founded university in Budapest
  2. European right shows divisions on EU values after Brexit
  3. Transparency is key EU tactic in Brexit talks
  4. Russia building 'arc of iron' around Europe
  5. Französische und deutsche Wahlen 'entscheidend' für Putin
  6. EU trying to salvage US deal on data privacy
  7. MEPs draw 'red lines' on Brexit deal
  8. MEPs call for reset in relations with Belarus