Government deficit at 5.8% of GDP in the euro area and 5.6% of GDP in the EU

January 27, 2021

According to the statistical office of the European Union (Eurostat), the third quarter seasonally adjusted general government deficit of GDP ratio was 5.8% in euro area and 5.6% EU. Notably, “a sharp rebound from the highest deficit recorded in the euro area and the EU since the start of the time series in the second quarter of 2020 and continued to be influenced by policy responses to the COVID-19 pandemic,” as per Eurostat. Also, Eurostat noted, “the deficit to GDP ratio decreased due to GDP growth, higher revenue and lower expenditure. In the third quarter of 2020, all Member States continued to record a government deficit.”

Furthermore, Eurostat records showed that the third quarter of 2020, total government revenue in euro area and EU closed at 446.2% (Q2: 47.7%) and 46% (Q2: 47.4%) of GDP, respectively. Eurostat noted, “this decrease as a percentage of GDP is due to stronger relative increase in GDP than the increase in total revenue – seasonally adjusted total revenue in the euro area increased by around €99 billion compared with the second quarter of 2020.”

On other hand, total government expenditure of GDP in the euro area was 52.1% (Q2: 59.6%) and stood at 51.6% (Q2: 59%) in the EU. Notably, Eurostat stated, “seasonally adjusted total government expenditure decreased by around €41 billion compared with the second quarter of 2020, mainly due to a lesser impact of policy measures to mitigate the economic and social impact of the COVID-19 pandemic.”


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