Under the European Treaties Member States shall avoid excessive government deficits and fulfill the following two criteria: its deficit to gross domestic product and ratio of government debt to gross domestic cannot exceed certain reference values, which were established by the relevant Protocol at 3 percent and 60 percent, respectively.
According to the last deficit and debt data posted by Eurostat, none of the European Union’s major economies observed the reference values in 2010 and according to the European Commission estimates and forecasts none of them will fulfill such values in 2011 and 2012.
The following table shows the 2010 deficit and debt figures posted by Eurostat[i] and the estimates and forecasts for 2011 y 2012, posted by the European Commission[ii].
Deficit: The general government deficit/surplus; it is the difference between the revenue and the expenditure of the general government sector.
Debt: General government gross debt outstanding at the end of the year (government liabilities: currency and deposits, securities other than shares excluding financial derivatives, and loans). The general government sector comprises the sub-sectors of central government, state government, local government and social security funds.
The EA17 consists of Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Luxembourg, Malta, theNetherlands, Austria, Portugal, Slovenia, Slovakia and Finland.
The EU27 includes Belgium (BE), Bulgaria (BG), the Czech Republic (CZ), Denmark (DK), Germany (DE), Estonia (EE), Ireland (IE), Greece (EL), Spain (ES), France (FR), Italy (IT), Cyprus (CY), Latvia (LV), Lithuania (LT), Luxembourg (LU), Hungary (HU), Malta (MT), the Netherlands (NL), Austria (AT), Poland (PL), Portugal (PT), Romania (RO), Slovenia (SI), Slovakia (SK), Finland (FI), Sweden (SE) and the United Kingdom (UK).
Deficit and debt references values
Treaty on the Functioning of the European Union
Article 126 (ex Article 104 TEC)
1. Member States shall avoid excessive government deficits.
2. … The reference values are specified in the Protocol on the excessive deficit procedure annexed to the Treaties.
Protocol (No. 12) on the excessive deficit procedure
The reference values referred to in Article 126(2) of the Treaty on the Functioning of the European Union are:
— 3 % for the ratio of the planned or actual government deficit to gross domestic product at market prices;
— 60 % for the ratio of government debt to gross domestic product at market prices.
[i] Eurostat, General government deficit/surplus, percentage of GDP
Eurostat, General government gross debt, percentage of GDP,
[ii] European Commission, European Economic Forecast – Autumn 2011. EUROPEAN ECONOMY 6|2011 (provisional version)
Table I.1.9. General government net lending
European Commission, Statistical Annex European Economic Forecast – Autumn 2011, TABLE 40 : Gross debt, general government (as a percentage of GDP