Budget deficit third biggest in EU at €13.5bn

Ireland’s budget deficit for 2012 has been revised upwards from €12.5bn to just over €13.5bn making it the third largest in the EU.

The new figure means that the deficit represented 8.2% of GDP rather than the 7.6% estimated back in April. According to the CSO, the revision arose mainly from Government revenue from mobile phone licence sales being initially recorded for 2012, rather than for 2013.

While the 8.2% figure is higher than first anticipated, it is still a vast improvement on the 2011 deficit of €21.36bn; which amounted to 13.1% of GDP. Furthermore, it was still better than the 8.6% of GDP target set by the troika for 2012.

Final annual data, published yesterday by Eurostat, the EU’s statistical agency, showed only Spain and Greece as having a higher budget deficit than Ireland last year. While Spain’s jumped from 9.6% of GDP to 10.6%; Greece’s actually lowered from 9.5% in 2011 to 9% for last year.

While 15 member states saw their deficits improve last year, one remained stable and 12 saw a worsening. Sweden, Estonia, Luxembourg and Bulgaria had the lowest deficits — ranging from 0.2% of GDP to 0.8%. Britain recorded a deficit of 6.1% of GDP; down from 7.7% in 2011. Germany, meanwhile, was the only EU nation to deliver a government surplus. Seventeen member states had deficits higher than 3% of GDP.

Eurostat also noted that as of the end of 2012, the lowest ratios of government debt to GDP were recorded in Estonia, Bulgaria, Luxembourg and Romania; with the highest observed in Greece, Italy, Portugal and Ireland (117.4%, up from 104.1% in 2011). The eurozone’s deficit stood at 3.7% of GDP, with the EU, as a whole, 3.9%.

The Government’s official deficit target, for 2013, has been set at 7.4% of GDP, with some commentators suggesting it should marginally beat that.

“Ireland’s strategy in the past couple of years has been to under-promise and over-deliver on its budgetary targets, a trend that we believe is likely to be maintained in 2013. Despite the fact that the risks to the Government’s economic growth projections are clearly to the downside at this juncture, we still think that come end-December the budget deficit out-turn as a percentage of GDP will once more be lower than the 7.4% figure officially targeted, as the Department of Finance has allowed itself plenty of leeway. Our forecast is for a marginally lower figure of 7.3%,” said Alan McQuaid of Merrion Stockbrokers.

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