Bank deal hikes budget deficit to 13.1%

Ireland’s official budget deficit was increased by more than three percentage points when €5.8bn injected into the banks last July was classified as a deficit-increasing capital transfer, according to a report issued by the EU statistics body Eurostat.

This cash injection brought the Government’s general borrowing to 13.1% of GDP — the highest in the EU and well ahead of Greece at just over 9% for 2011.

However, the underlying deficit was 9.4%, which was lower than the target set by the EU of 10.6%.