Economy: The Grand Duchy has the smallest ratio of government deficit to GDP and the third lowest ratio of government debt to GDP in the EU, and reduced both numbers last year, a new report reveals.
The Luxembourg government’s deficit stood at 0.3% of GDP at the end of last year, down from 0.8% in 2010, according to revised figures issued Monday by Eurostat, the EU’s official statistics agency. Government debt was 18.3% of GDP in 2011, down from 19.2% the year before.
While both metrics marked improvements, in 2008 the Grand Duchy ran a budget surplus of 3.2%, had debt of only 14.4%.
“The decrease in the deficit for 2011 is mainly due to the improved accounting results of the special funds and an increase in the reported surplus of social security funds,” Eurostat noted.
Last year Finland had a budget deficit of 0.6% and Germany of 0.8%, while the EU27 average was 4.4% and euro zone average was 4.1%. Ireland’s deficit represented 13.4% of GDP, and Greece and Spain’s 9.4%. Hungary, Estonia and Sweden were the only three EU member states with budget surpluses in 2011.
Estonia and Bulgaria had lower government debt levels than Luxembourg, while 14 member states owed more than the 60% of GDP target enshrined in EU agreements. These include Greece (170.6%), Italy (120.7%), Portugal (108.1%), Ireland (106.4%), Belgium (97.8%), France (86.0%), the UK (85.0%), Germany (80.5%), Spain (69.3%) and the Netherlands (65.5%).
Future liabilities, such as pensions owed to workers retiring in coming years, were not including in the calculations. Many economic leaders, including Luxembourg central bank chief Yves Mersch, have warned that such obligations could push up Luxembourg’s deficit and debt levels.