Economy grows but so does deficit
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Europe's economy grew by 0.2 per cent during the first quarter of the year, thanks to improvements in France, Germany and Italy. But new figures show France's public debt and deficit higher than previously thought - and the highest on record. That makes a plan to conform to European deficit regulations by 2013 look unrealistic.
The economy of the 16 countries that use the euro and of the 27 countries in the European Union grew by 0.2 per cent during the first quarter of the year, the European Union's statistics' office, Eurostat, said on Wednesday. Industrial production rose by 1.3 per cent in March from the previous month.
France's economy grew by 0.1 per cent, less than the predicted 0.2 per cent growth.
The French national statistics office said the recession of the last two years was worse that previously thought. The country's GDP grew 0.1 per cent in 2008, rather than the 0.3 per cent growth that had been announced.
The recession in 2009 was also worse than previously estimated, with a 2.5 per cent drop in GDP, as opposed to 2.2 per cent.
This means that public debt is at 78.1 per cent of GDP, a historic high. The deficit is also at a record at 7.5 per cent of GDP.
France expects to have a defict of eight per cent of GDP by the end of the year. The government has said it would reduce it to six per cent next year, 4.6 per cent in 2012 and finally conform to European regulations in 2013 by taking it down to three per cent.
This would require a 2.5 per cent growth every year. The European Commission says this is optimistic. The government is predicting growth of 1.4 per cent this year.
Recession in Europe officially ended in the third quarter last year. Germany, France and Italy's growth helped to offset contractions in Greece and eastern Europe in the first quarter of 2010.
The good news:
- Portugal up one per cent since the previous quarter.
- Hungary up 0.9 per cent.
- Slovakia up 0.8 per cent.
- Italy up 0.5 per cent.
- Latvia up 0.3 per cent.
- Germany up 0.2 per cent
- United Kingdom up 0.2 per cent
- Czech Republic up 0.2 per cent.
- Belgium up 0.1 per cent.
- Spain up 0.1 per cent.
The bad news:
- Lithuania down 4.1 per cent.
- Romania down 0.3 per cent.
- Estonia down 2.3 per cent.
- Greece down 0.8 per cent.
- Cyprus down 0.2 per cent.
There was no data available for Ireland, Bulgaria, Denmark, Luxembourg, Malta, Poland, Slovenia, Finland and Sweden.
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