Euro zone government deficit more than halved last year and debt also fell, with all countries in the single currency below 3 per cent of gross domestic product, new data showed today.
Government deficit in the 15 countries now using the euro fell to 0.6 per cent of GDP in 2007 from 1.3 per cent in 2006 and debt declined to 66.3 per cent from 68.4 per cent.
"This is the best figure ever," European Commission spokeswoman Amelia Torres said, referring to the deficit. "This result demonstrates that the Stability and Growth Pact is working."
The pact sets a ceiling of 3 per cent of GDP for budget deficits and 60 per cent of GDP for debt. Germany, the euro zone's biggest economy, made the biggest deficit cut of 1.6 percentage points, bringing its public finances into balance ahead of a 2010 deadline agreed by euro zone finance ministers.
Italy cut its shortfall by 1.5 percentage points to 1.9 per cent of GDP in 2007 and Portugal reduced its deficit by 1.3 percentage points to 2.6 per cent.
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 per cent from 2.4 per cent despite government plans to cut it to 2.3 per cent. Public debt in France, the euro zone's second-biggest economy, rose to 64.2 per cent from 63.6 per cent.
Greece saw its deficit widen to 2.8 per cent from 2.6 per cent and Belgium moved from a 0.3 per cent surplus to a 0.2 per cent deficit.
Hungary was the only EU member with a deficit higher than the bloc's 3 per cent ceiling, at 5.5 pe rcent of GDP, and is the only country likely to remain under the EU's disciplinary budget procedure.
In the whole European Union of 27 countries, government deficit fell to 0.9 per cent of GDP from 1.4 per cent and debt dipped to 58.7 per cent from 61.2 per cent.