Brussels, Belgium (4E) – The combined budget deficit by the governments of the 17-member euro zone dropped below the common-currency area’s target in the fourth quarter of 2013, the first time since the financial crisis started in 2008.
On a seasonally adjusted basis, the gap between government spending and revenues narrowed to 2.6 percent of economic output in the October to December period from 3.1 percent of gross domestic product (GDP) in the prior three months, according to the European Union’s statistics report released Thursday.
Thursday’s data represents the first drop below the 3.0 percent target that the governments agreed beginning the third quarter of 2008 under European Union rules, following the collapse of Lehman Brothers that started the global financial crisis.
The drop in borrowing requirements of the euro-zone governments is further evidence that the currency area is returning to growth. After several years of spending cuts, government debts are also starting to rise.
The euro area returned to economic expansion in the second quarter last year. Since then, government tax revenues have started to climb, and stood at 46.9 percent of GDP in the fourth quarter of 2013, according to Eurostat.