The combined budget deficit of the euro zone's 17 governments fell below the currency area's target in the final quarter of last year, for the first time since the onset of the financial crisis in 2008.
The reduction in the borrowing needs of euro-zone governments suggests that the currency area's return to growth, as well as several years of spending cuts, are finally slowing the rise in government debts.
However, those debts are unlikely to fall rapidly without higher rates of economic growth and inflation. The European Union's statistics agency Thursday said that on a seasonally adjusted basis, the gap between government revenues and spending fell to 2.6% of economic output in the final three months of 2013 from 3.1% of gross domestic product in the third quarter.
That marked the first decline below the 3.0% target agreed by governments under EU rules since the third quarter of 2008, when the collapse of Lehman Brothers triggered the global financial crisis that eventually segued into an interlinked banking and government debt crisis for the euro zone in 2010.
The euro-zone economy returned to growth in the second quarter of 2013. Eurostat's figures show that since then, government tax revenues have started to rise, and stood at 46.9% of GDP in the final quarter of last year.
Over the same period, government spending has been falling. While many euro-zone governments have eased back on spending cuts since last year, there are some important exceptions. France's government Wednesday said it will make additional cuts of 4 billion euros in order to meet EU requirements.
The continuation of economic growth into 2014 is likely to boost tax revenues further, and shrink the budget deficit this year. But it will likely take many years before the currency area can bring government debts back down to pre- crisis levels.
Eurostat Wednesday said the combined debt of the euro zone's 17 governments rose to 92.6% of gross domestic product in 2013, the highest level since records began in 1995. Since January this year there have been 18 euro-zone members when Latvia started using the euro.
nasdaq.com
The reduction in the borrowing needs of euro-zone governments suggests that the currency area's return to growth, as well as several years of spending cuts, are finally slowing the rise in government debts.
However, those debts are unlikely to fall rapidly without higher rates of economic growth and inflation. The European Union's statistics agency Thursday said that on a seasonally adjusted basis, the gap between government revenues and spending fell to 2.6% of economic output in the final three months of 2013 from 3.1% of gross domestic product in the third quarter.
That marked the first decline below the 3.0% target agreed by governments under EU rules since the third quarter of 2008, when the collapse of Lehman Brothers triggered the global financial crisis that eventually segued into an interlinked banking and government debt crisis for the euro zone in 2010.
The euro-zone economy returned to growth in the second quarter of 2013. Eurostat's figures show that since then, government tax revenues have started to rise, and stood at 46.9% of GDP in the final quarter of last year.
Over the same period, government spending has been falling. While many euro-zone governments have eased back on spending cuts since last year, there are some important exceptions. France's government Wednesday said it will make additional cuts of 4 billion euros in order to meet EU requirements.
The continuation of economic growth into 2014 is likely to boost tax revenues further, and shrink the budget deficit this year. But it will likely take many years before the currency area can bring government debts back down to pre- crisis levels.
Eurostat Wednesday said the combined debt of the euro zone's 17 governments rose to 92.6% of gross domestic product in 2013, the highest level since records began in 1995. Since January this year there have been 18 euro-zone members when Latvia started using the euro.
nasdaq.com
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