Disappointing annual results across much of trading bloc as borrowings rose in several countries despite cost-cutting drive
The austerity measures being pursued by a number of European countries have led to very little gain, official figures show.
Several countries at the forefront of the economic crisis saw borrowings rise last year, even though they followed the strict fiscal tightening prescribed by international creditors to keep their debt levels down, according to figures from Eurostat, the EU's statistics office.
Though the cumulative level of government deficits fell last year, mainly because of Germany swinging into a budget surplus, many countries have continued to reel from the costs associated with recession.
Spending cuts and tax increases have helped to reduce deficits across the 17 EU countries that use the euro, but the region's debt burden rose after economic growth flatlined and fewer companies and households paid taxes.
Of the four countries that accepted financial assistance, Portugal and Spain saw their deficits swell in value terms and in proportion to the size of their economies. Portugal's deficit increased to 6.4% of GDP in 2012, from 4.4% the year before; Spain's jumped to 10.6% from 9.4%.
Greece managed to make further inroads in cutting its borrowings, but the deficit rose to 10% of its annual GDP from 9.5% as the country remained mired in a deep recession. Only Ireland, widely viewed as the poster child of austerity, saw its deficit fall under both criteria – it stood at 7.6% of GDP against 13.4% the year before.
Overall in the eurozone, the deficit dropped in 2012, to about €353bn (£302bn) from €391bn the year before, with Germany posting a dramatic improvement. Europe's biggest economy posted a €4.1bn budget surplus last year compared with a €20.2bn deficit in 2011. As a result, the budget deficit of the whole eurozone fell to 3.7% of the region's annual GDP. In 2012, eurozone debt was worth 90.6% of the region's annual GDP, up from 87.3%.
Overall borrowing in the eurozone stands well in comparison with the US, which has a budget deficit worth about 7% of annual GDP.
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