Eurozone deficits improve, debt mounts

Eurozone public finances improved in 2013 as the economy finally turned the corner on a record recession but total debt levels remained dangerously high, official data showed on Wednesday. The average eurozone government deficit -- the shortfall between revenue and spending -- came in at 3.0 percent of output last year, in line with the EU ceiling and down from 3.7 percent in 2012, the Eurostat statistics agency said. The overall figures are broadly in line with signs that the causes and impact of the eurozone debt crisis, which at one point threatened to destroy the euro, are fading. Total accumulated debt, however, increased to 92.6 percent of gross domestic product, up from 90.7 percent, rising even further above the European Union 60-percent limit. The continued increase in debt levels reflects the high cost of the economic slump and debt crisis as governments borrowed heavily in an effort to stabilise their economies. For the full 28-nation European Union, the average public deficit was 3.3 percent, down from 3.9 percent, while total debt increased to 87.1 percent of GDP from 85.2 percent, Eurostat said in a report based on submissions by the EU member states. Europe's powerhouse economy Germany once again put in the best performance, with its public finances in balance last year. In marked contrast, France, struggling for growth and under pressure from Brussels to meet the 3.0 percent target, stood out with a deficit of 4.3 percent. France was supposed to have kept the 2013 deficit to 4.1 percent but with the economy in difficulty, the European Union in June agreed to give Paris two extra years, until 2015, to bring it back down to the EU ceiling. However, there continue to be doubts whether the French government can hit that target as it seeks to balance the books with major and very unpopular cuts to social welfare spending. Other EU countries coming in above the 3.0 percent limit were led by Slovenia on 14.7 percent. Twice-bailed out Greece had a deficit of 12.7 percent, Ireland 7.2 percent, Spain 7.1 percent, non-euro Britain 5.8 percent, Cyprus 5.4 percent, with Croatia and Portugal on 4.9 percent and Poland on 4.3 percent. In February, the European Commission estimated that the average 2013 eurozone public deficit would come in at 3.1 percent, falling to 2.6 percent this year and 2.5 percent in 2015. The Commission also gave higher debt levels, putting eurozone total debt last year at 95.5 percent, with very little improvement expected over the next few years.