New numbers from Eurostat show that government finances have improved across the EU.
Budget deficits declined in the euro area from 3.4% of gross domestic product, GDP, in the fourth quarter of 2021, to 2.3% of GDP in the first quarter of 2022.
In the EU as a whole, the decline was from 3.3% of GDP to 2.2%.
Three countries with large deficits saw significant improvements. The Bulgarian budget deficit fell by almost half, from 9.6% of GDP to 4.9%. In Latvia, the deficit fell from 6.5% of GDP to 3.1%, with Slovakia close behind with a deficit reduction from 6.4% of GDP to 3.7%.
In total, twelve EU member states experienced a reduction in their deficits. Portugal turned a deficit of 1.2% of GDP into a 0.9% surplus. Ireland and Luxembourg moderately improved their budget surpluses.
In eight countries, budget balances deteriorated. The Danish government went from a 0.6% of GDP surplus in Q4 of 2021 to a minuscule 0.1% in Q1 this year. Lithuania experienced a decline of its surplus from 1.6% to 0.3%.
Sweden was the only country that saw a surplus turn into a deficit: in the last quarter of 2021 its public finances showed a positive margin of 0.5% of GDP. In the first quarter of 2022 the balance was a negative 0.1% of the country’s GDP.
The overall trend of improving budget balances helped improve debt-to-GDP ratios across Europe. For the EU as a whole, total government debt declined from 88.1% in the fourth quarter of last year to 87.8% in the first quarter of 2022. The corresponding numbers for the euro zone are marginal: 95.7% and 95.6%, respectively.
The public debt burden varies significantly across the EU. Greece remains the most indebted country, with 189.9% of GDP; the ratio is a marginal improvement from 193.3% the last quarter of 2021. Italy follows Greece with a debt ratio of 152.6% of GDP; Spain (117.7%), France (114.4%), and Belgium (107.9%) complete the top-five most indebted EU member states.
Estonia has the lowest debt ratio at 17.6% of GDP, followed by Luxembourg (22.3%) and Bulgaria (22.9%).