Thursday

22nd Oct 2020

Greek, Portuguese deficits overshoot targets

Despite, or perhaps because, of draconian austerity measures being imposed in Europe's periphery, budget deficit numbers in these countries are only worsening, new data has revealed.

Greece and Portugal saw their budget deficits revised sharply above their promised targets, according to figures released by the EU's official statistical agency, Eurostat, on Tuesday (26 April).

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Athens' budget deficit for 2010 was adjusted upwards to 10.5 percent of GDP, up from the previous estimate of 9.6 percent.

Meanwhile, the level of national debt soared to 142.8 percent of GDP after the adjustment, up from 127.1 percent.

Portugal's deficit target was also substantially overshot, with the predicted budget hole climbing from 7.3 percent for 2010 to 9.1 percent of GDP.

The third eurozone state in the bail-out process, Ireland, also did not receive any good news from the numbers agency, which reported its deficit for last year at a staggering 32.4 percent of GDP.

Spain was the sole member of the peripheral nations to have a reason to be cheerful. Its deficit target was not only met but beaten.

Eurostat put its deficit figure at 9.2 percent, a sliver under its 9.3 percent target.

A growing number of economists are arguing that the countries are trapped in a debt spiral in which austerity imposed to try to wrench them out of their negative situation are causing a sharp drop in spending, further reducing government revenues and increasing the deficit.

The European Commission - one of the three architects of the austerity structure, together with the International Monetary Fund and the European Central Bank - said it is "premature" to say whether Greece or other countries would require additional measures to combat the crisis.

"The Greek authorities have shown they are determined to do what is necessary to fulfill the elements of the program," commission economics spokesman Amadeu Altafaj-Tardio told reporters after the figures were released.

Athens for its part insisted it will not swerve from the path of austerity.

"The Greek government remains committed to achieving its deficit targets," the government said in a statement.

Notably, the stats agency also pegged the UK as the EU's third worst deficit offender, at 10.4 percent of GDP.

In separate news, French President Nicolas Sarkozy came out in favour of Italian former Goldman Sachs adviser Mario Draghi for the position of European Central Bank chief, telling reporters on Tuesday he would be "very happy" to see him in the job.

The announcement significantly reduces the obstacles to the man who has waged a quiet campaign to win the title after Germany's preferred candidate, Axel Weber, dropped out of the running.

Germany asks capitals to give a little in EU budget impasse

European Parliament negotiators are demanding €39bn in new funding for EU programmes such as Horizon research and Erasmus, in talks with the German EU presidency on the budget. Meanwhile, rule-of-law enforcement negotiations have only just begun.

EU budget talks suspended in fight for new funds

MEPs are requesting additional, new funding of €39bn for 15 EU programs. The German presidency argues that budget ceilings, agreed by EU leaders at a marathon summit in July, will be impossible to change without a new leaders' meeting.

EU countries stuck on rule of law-budget link

Divisions among EU governments remain between those who want to suspend EU funds if rule of law is not respected, and those who want to narrow down conditionality.

MEPs warn of 'significant gaps' in budget talks

The budget committee chair said the European Parliament expects tangible improvements to the package in its talks with member states - while the German minister argued that the EU leaders' deal was difficult enough.

Top EU officials urge MEPs give quick budget-deal approval

MEPs criticised the EU deal on the budget and recovery package clinched by leaders after five days of gruelling talks, saying it is not enough "future-oriented", and cuts too deeply into EU policies, including health, innovation, defence and humanitarian aid

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