Wednesday, January 27, 2010

Financial Turmoil: its impact on quarterly government accounts

From: Financial Turmoil: its impact on quarterly government accounts

In recent years Eurostat has significantly expanded the range of integrated quarterly data available on government finances, providing a timely and increasingly high quality picture of the evolution of government finances in the EU. These data now reflect non-financial, financial and debt aspects, and cover all countries in the European Union. This publication examines the main features of these data as they reflect the lead-up to and stages on the economic and financial crisis, based on data transmitted by Member States at the end of September 2009. This publication complements the SiF recently published which provides an in-depth analysis of quarterly non-financial accounts (number 93/2009)

All Member States, except Malta experienced an increase of their average government deficit from 2008Q4 to 2009Q2 (or equivalently, a decrease in their net lending/net borrowing figures). Four Member States (Finland, Denmark, Luxembourg and Sweden) recorded average government surpluses on the last 4 quarters
2008Q3-2009Q2, while the remaining countries reported deficits. The highest average deficits in % of GDP wereregistered by Greece (10.6%), Ireland (10.1%); Spain (8.7%), the UK (8.4%) and Latvia (8.3%).

Figure 7 shows QGD in percentage of GDP for 2007Q4 and 2008Q4 in every country and for the EU-27 and the EA-16 (note that the debt stock for a calendar year is the debt stock at the last quarter of that year). Italy presented the highest level of QGD for both years, with an increase of more than 2 points of debt in terms of its GDP. Estonia still has the lowest level, with 4.6% of debt over GDP in 2008, while it was just under 4% in 2007. Also worth noting are the increase of almost 13 points in the Netherlands, which brings the country's ratio to 58%, and the 10 points drop in Cyprus, falling from 59% to 49%. Finally, with an average increase of 3 points, Austria's debt went over the 60% percentage of GDP between 2007Q4 and 2008Q4.

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