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Recession swells 13 euro nations' budget deficits

Recession swells 13 euro nations' budget deficits

Finance ministers from the 16 nations that use the euro on Monday discussed huge budget gaps that breach the 3 percent of gross domestic product limit supposed to underpin their shared currency.
The recession will saddle 13 of the 16 euro-zone nations with deficits well over 3 percent of GDP in 2009 and the outlook for 2010 is even worse, the European Commission forecast earlier.
But in the face of that bleak news, EU governments took a stay-the-course attitude _ for now _ vowing to stick with costly economic revival packages that have yet to show their full impact.
Despite concerns about the level of borrowing, Joaquin Almunia, the EU's Financial Affairs Commissioner, refused to rule out new spending, saying EU leaders could discuss this at a mid-June summit in Brussels.
The Commission's annual spring forecasts earlier spoke of a "deep and widespread recession" that will push up unemployment to record levels in 2010.
It is now forecasting that both the euro-zone and the 27-nation EU as a whole will contract by 4 percent this year _ more than double January's estimates.
Stalling growth and surging unemployment have hit government revenues, just as they pay out billions more in social welfare and health care to the rising number of unemployed.
Thirteen nations will break through the budget deficit limit this year, the EU executive predicts _ including Germany, which prides itself on fiscal prudence; the German deficit will likely surge from 3.9 percent this year to 5.9 percent next year.
France's deficit is expected to balloon from 3.4 percent in 2008 to 6.6 percent this year and 7 percent next year.
Five euro-zone nations had a deficit over the EU limit last year: Ireland, Greece, Spain, France and Malta.
In 2009, their gaps will grow and eight others will join them: Belgium, Germany, Italy, the Netherlands, Austria, Portugal, Slovenia and Slovakia.
Ireland will see a massive budget gap, climbing from 7.1 percent in 2008, to 12 percent in 2009 and 15.6 percent in 2010. It has been ordered to reduce that to under 3 percent by 2013.
Widening deficits and mounting debt are a new headache for EU nations as they constrain them from spending more to stimulate their economies.
They have already agreed stimulus packages worth an extra


Updated : 2021-02-26 13:11 GMT+08:00