EU gains trillions in revenue — and debt

(CN) — In 2023, the GDP in the European Union hit 16.9 trillion euros ($18 trillion), according to data published by Eurostat on Monday — a 1 trillion euro increase from the year prior, and a 3.5 trillion euro leap since 2020. Still, government expenditures and debts have kept pace.

At the time of publication, the U.S. dollar equaled 0.94 euros.

For more than a decade prior to 2020, the EU’s expenditure-to-GDP ratio generally decreased. Then the Covid-19 pandemic hit.

“The decreasing trend in general government deficits was broken in the first quarter of 2020, when EU member states began to introduce expenditure measures to mitigate the economic and social impact of the Covid-19 pandemic,” Eurostat economists said in a statement. “Strong decreases in total revenue mainly due to declines in economic activity and tax cuts introduced by governments and increases in total expenditure have been observed since this period.”

Despite subsequent gains, government expenses continue to outpace the revenue being generated. Government debt in the EU bottomed out at $14.7 trillion last year, about 82% of GDP.

While the government deficit increased $60 billion between 2022 and 2023, the deficit has fallen $223 billion since 2020.

Last year, government expenditures averaged 50% of GDP across EU member states, while revenues averaged 46% of the market.

In total, the government deficit-to-GDP ratio averaged 3.5% last year, a tenth of a point higher than in 2022.

Only four member states reported government surpluses in 2023: Cyprus, Denmark, Ireland and Portugal.

With a deficit ratio of 7.4%, Italy reported the highest debt in the EU, followed by Romania at 6.6%.

Government revenue remained unchanged between the third and fourth quarters of 2023, amounting to 46% of GDP. While revenue remained steady, expenditures increased by half a point, up to 50.2% of GDP, adding 54 billion euros ($58 billion) to government debt.

Adding up to 9.4% of GDP, Malta reported the EU’s biggest fourth quarter deficit last year, a ratio more than six points higher than the first three-quarters of the year.

Poland, 7.4%, and Estonia, 6.5%, also ended the year with fourth quarter deficit spikes.

Three members states reported fourth quarter surpluses and only the Netherlands reported breaking even. Bulgaria reported the highest surplus at 3.6%, followed by Denmark, 2.6%, and Ireland, 1.3%.

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