Euro zone budget deficits and public debt fell last year thanks to strong improvements in the finances of Germany, Greece, Ireland, Portugal and Spain, data showed today.
European Union statistics office Eurostat said the overall budget deficit in the 13 countries now using the euro dropped to 1.6 per cent of GDP from 2.5 per cent in 2005.
Euro zone finance ministers agreed on Friday to take advantage of relatively fast economic growth and aim for balanced budgets or surplus by 2010 at the latest. Eurostat said government debt in the euro zone shrank to 69 per cent of GDP from 70.5 per cent in 2005.
According to EU rules the debt should not exceed 60 per cent. Eurostat data showed that one of the biggest contributors to the fall in the 2006 euro zone deficit was the region's biggest economy Germany, which slashed its shortfall to 1.7 per cent from 3.2 in 2005.
Ireland's budget surplus jumped to 2.9 from 1 per cent. Greece more than halved its budget gap to 2.6 per cent of GDP from an upwardly revised 5.5 per cent in 2005, Eurostat said. Greece is undergoing the EU's disciplinary procedure for running excessive budget deficits above the bloc's ceiling of 3 per cent of GDP.
Portugal also slashed its deficit to 3.9 per cent from 6.1 per cent in 2005, and France saw its gap shrink to 2.5 per cent from 3.0 per cent.
But the third biggest euro zone economy, Italy, recorded an increase of its deficit to 4.4 per cent last year from an upwardly revised 4.2 per cent in 2005.