Public Finances, Budgetary Developments And Planned Changes In The EU And In Cyprus

A slow recovery after the crisis

All European Union countries have been affected between 2008 and 2010 by the economic and financial crisis and after a contraction in 2009 in every EU country, except Poland, growth returned in 2010 in all but five peripheral countries. While in 2010 several countries continued to support their economies through discretionary measures, other countries had less room for manoeuvres given their underlying public finance situation trying to consolidate them. In 2011 this consolidation is being stepped up, with all euro area Member States improving their underlying budget balance through fiscal tightening.

In the EU 27, because of lasting weaknesses to the public finances, debt is forecast to rise from 59.0% of GDP in 2007 to 83.3% in 2012. For the euro area the corresponding figures are in increase from 66.3% to 88.7%. On the other hand, EU Member States are required by the Treaty to ensure that their government deficits do not exceed