Page last updated at 10:14 GMT, Wednesday, 22 April 2009 11:14 UK

European budget deficits rising

Euro symbol
Deficits are rising across the eurozone

Most EU countries' budget deficits rose last year as spending increased and income fell, Eurostat has said.

The collective deficit of the 27 countries in the EU rose to 2.3% of GDP last year, up from 0.8% in 2007, with the UK recording a 5.5% deficit.

The deficit in the 16 countries which use the euro increased to 1.9% of GDP, against 0.6% in 2007, with Ireland's deficit the highest, at 7.1%.

Other eurozone countries also breached the bloc's 3% deficit ceiling.

Spain recorded a 3.8% deficit and France a 3.4% deficit.

Poland recorded a deficit of 3.9% of GDP, up from 1.9% in 2007. This means that Poland - which wants to join the currency zone in 2012 - no longer meets the key budget deficit criteria.

The UK deficit figures may change, the European statistics agency said, as £185bn of Treasury bills issued by the Bank of England may count as government debt.

European governments spent heavily last year on bank bail-outs and fiscal stimulus, as part of efforts to rescue the banking system and revive their slowing economies.

Deficits look set to continue rising. The Commission has forecast that the eurozone's deficit will reach 4% of GDP in 2009, the highest yet, and 4.4% in 2010.

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