German Chancellor Gerhard Schröder - Germany's 2004 government debt as a percentage of GDP at 66% compared with the Euro Growth and Stability Pact target of 60%, was marginally above France's level.

In 2004, the government deficit of the euro-zone¹ and the EU25 improved compared to 2003, while the government debt increased. In the euro-zone, the government deficit decreased from 2.8% of GDP in 2003² to 2.7% in 2004, and in the EU25 it fell from 2.9% in 2003 to 2.6% in 2004. In the euro-zone the government debt to GDP ratio rose from 70.8% in 2003 to 71.3% in 2004, and in the EU25 from 63.3% to 63.8%.

These results are based on the data on government deficit and debt³ for 2004 transmitted by the 25 Member States to the European Commission (first notification⁴ 2005). This notification is based on the ESA95 system of national accounts.

The attached data have been examined by Eurostat, the Statistical Office of the European Communities. The data are consistent with Eurostat decisions, including the most recent decision on treatment of transfers from the EU budget to the Member States⁵. However, for certain Member States Eurostat has to undertake further examination of deficit and debt data before the figures can be validated. Further explanations can be found under “Outstanding issues”.

In 2004 the largest government deficits in percentage of GDP were recorded by Greece (-6.1%), Malta (-5.2%), Poland (-4.8%), Hungary (-4.5%) and Cyprus (-4.2%). Six Member States continued to register a government surplus in 2004: Denmark (+2.8%), Finland (+2.1%), Estonia (+1.8%), Sweden (+1.4%), Ireland (+1.3%) and Belgium (+0.1%). In all, fourteen Member States recorded an improved public balance relative to GDP, while ten Member States registered a worsening.

In 2004 the lowest ratios of government debt to GDP were recorded in Estonia (4.9%), Luxembourg (7.5%), Latvia (14.4%) and Lithuania (19.7%). Nine Member States had a government debt ratio higher than 60% of GDP in 2004, the same as in 2003: Greece (110.5%), Italy (105.8%), Belgium (95.6%), Malta (75.0%), Cyprus (71.9%), Germany (66.0%), France (65.6%), Austria (65.2%), and Portugal (61.9%).

Outstanding issues

As usual, the data reported by Member States for the 1 March notification are subject to revision afterwards, notably, but not exclusively, in the second notification due by 1 September.

Eurostat notes that there are ongoing discussions with the national statistical authorities of the following Member States, which prevent Eurostat from validating their data for the time being.

• Greece: Eurostat is not in a position to validate the figures for Greece. This is mainly due to a newly communicated inconsistency in the recording of flows between Greece and the EU budget. In addition, data for government deficit for the years 2002 and 2003 have also been revised by the Greek authorities in their March 2005 notification. These revisions were mainly due to the fact that a new law concerning the repayment of debt of hospitals was adopted at the end of 2004 by the Greek government. This revealed that unpaid expenditure by hospitals for the past years had not been properly booked when expenditure was incurred. Moreover, data on expenditure arrears of hospitals and on government expenditure for the Olympic Games are not yet final. This could lead to a further upward revision in the deficit figures.
• Italy: Eurostat is not in a position to validate the figures for Italy. This is mainly due to the recording of payments to government by financial institutions which act as tax collectors on behalf of the government (concessionari d'imposta), the sectoral classification of government-owned entities (ISPA), the treatment of a securitisation operation, the recording of transactions with the EU budget, inconsistencies between data on cash and accrual bases and statistical discrepancies in government accounts. The clarification of these issues could lead to an upward revision in the government deficit, most notably for 2003 and 2004.

Eurostat notes that there are ongoing discussions with the national statistical authorities of the following Member States which may lead to a subsequent revision of the data.

• Portugal: There are ongoing discussions between Eurostat and Portugal on the consistency between accrual and cash-based data provided by Portugal, for the period 2001-2004.
• Latvia: There are ongoing discussions between Eurostat and Latvia on the recording of payments to the EU budget. This issue could lead to a downward revision in the government deficit for 2004.
• Lithuania: There are ongoing discussions between Eurostat and Lithuania on the recording of restitutions of confiscated property and compensation for losses incurred during the changeover from the Ruble to the Lita. These issues could lead to a downward revision in the government deficit for 2004 and earlier years.

Eurostat intends to settle these issues as soon as possible in cooperation with Member States' statistical authorities.

1. Euro-zone: Belgium, Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, Netherlands, Austria, Portugal and Finland.
2. In the previous notification, the 2003 government deficits for the euro-zone and the EU25 were 2.7% and 2.8% of GDP respectively. The government debt of the euro-zone was 70.7% of GDP and of the EU25 63.3% of GDP. See News Release 117/2004 of 23 September 2004.
3. According to the 'Maastricht Treaty' (Protocol on the excessive deficit procedure), government deficit (surplus) means the net borrowing (net lending) of the whole general government sector (central government, state government, local government and social security funds). It is calculated according to national accounts concepts (European System of Accounts, ESA95). Government debt is the consolidated gross debt of the whole general government sector outstanding at the end of the year (in nominal value). Primary surplus means the government deficit/surplus excluding interest charges (consolidated). However, interest data for Sweden are not consolidated.

• Table of euro-zone, EU25 and EU15 aggregates: the data are in euro. For those countries not belonging to the euro-zone, the rate of conversion into euro is as follows:

- for deficit / surplus and GDP data, the annual average exchange rate;

- for the stock of government debt, the end of year exchange rate.

• Table of national data: these are in national currencies, including euro for the euro-zone countries.
• Figures for the year 2004 are partly estimated. They might be revised in the next notification, due at end-August 2005.

1. According to Council Regulation No 3605/93, as amended by Council Regulation No. 475/2000 and Commission Regulation (EC) No 351/2002.
2. See News Release 22/2005, 15 February 2005.

GDP, deficit/surplus and debt in the EU (in national currencies)

GDP, deficit/surplus and debt in the EU (in national currencies)

GDP, deficit/surplus and debt in the EU (in national currencies)

GDP, deficit/surplus and debt in the EU (in national currencies)

1. The United Kingdom's reported data have been adjusted by Eurostat to record all the UMTS licence proceeds in 2000, according to Eurostat's decision (News Release 81/2000 of 14 July 2000); as a consequence of this adjustment, the UK government surplus was increased by GBP 21 932 million (2.3% of GDP) in 2000 and decreased by GBP 1 044 million (-0.1% of GDP) in 2001. The deficit in 2002 and 2004 was increased by GBP 1 044 million (-0.1% of GDP), and in 2003 by GBP 1 045 million (-0.1% of GDP).