Despite efforts by 15 out of the 17 eurozone states to reduce their government deficits from an average of 6.2pc of gross domestic product (GDP) in 2010 to 4.1pc last year, overall debt rose from 85.3pc of GDP to 87.2pc - the highest level since the euro was created in 1999, according to Eurostat.
After a financial crisis that has dragged on for close to five years, Monday's figures underlined how difficult it will be for the eurozone to bring its deficits and debts back below the EU-stipulated limits of a deficit of 3pc and debt of 60pc of GDP.
According to Eurostat's data, Ireland's deficit of 13.1pc of GDP was by far the highest as the bailed-out country continued to spend billions bailing out its struggling banks. Eurostat expressed reservations about the 13.1pc figure, amid disagreement with the Irish government whether €5.8bn in aid to two nationalised banks should be included in the country's deficit.
Ireland, which was granted €67.5bn in rescue loans from the EU and the International Monetary Fund in 2010, argues that the bank bailouts should not be included in the government deficit, as some of that money may be recovered. Without the bank aid, Ireland's deficit would have been 9.4 percent of GDP, still the highest in the EU.
Ireland is due to hold a referendum on the EU's new fiscal treaty on May 31.
In a statement, Ireland's finance ministry said the higher figure was the result of a technical "reclassification" of assets, pointing out that the 9.4pc figure was far below the 10.6pc target it has promised to meet in return for the rescue loans. In 2010, massive bank bailouts propelled Ireland's deficit to a record 31.2pc of economic output. The finance ministry said this year's deficit should fall to 8.2pc of GDP.
Greece's deficit of 9.1pc of GDP was not much better than Ireland's, and Athens has already started injecting billions of euros into its own banks which are reeling from a restructuring of the country's government debts. While the restructuring reduced Greece's debt levels, the resulting bank bailouts may push up its deficit in the short-term.
Spain, which has seen its borrowing costs rise sharply in recent weeks, ran a deficit of 8.5pc. Across the 27-country EU the average 2011 deficit was 4.5pc of GDP, down from 6.5 percent in 2010. Among the EU states that do not use the euro, the UK had the highest deficit, which reached 8.4pc of GDP in the year ended March 31.
In contrast to the rest of the EU, the UK's fiscal year runs from April 1 to March 31.
Greece's deficit of 9.1pc of GDP was not much better than Ireland's, and Athens has already started injecting billions of euros into its own banks which are reeling from a restructuring of the country's government debts. While the restructuring reduced Greece's debt levels, the resulting bank bailouts may push up its deficit in the short-term.
Spain, which has seen its borrowing costs rise sharply in recent weeks, ran a deficit of 8.5pc. Across the 27-country EU the average 2011 deficit was 4.5pc of GDP, down from 6.5 percent in 2010. Among the EU states that do not use the euro, the UK had the highest deficit, which reached 8.4pc of GDP in the year ended March 31.
In contrast to the rest of the EU, the UK's fiscal year runs from April 1 to March 31.
The Telegraph
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