European austerity shows mixed results in 2012

LONDON The austerity pain being pursued by a number of European countries led to very little gain in 2012, official figures showed Monday.

The year-end figures from Eurostat, the European Union's statistics office, showed that a number of the countries at the forefront of Europe's financial crisis saw their borrowings rise even though they have pursued the strict austerity medicine prescribed by international creditors to keep their debt levels down.

Though the cumulative level of government deficits fell during the year, largely thanks to Germany swinging into a budget surplus, others continue to reel from the costs associated with recession.

Spending cuts and tax increases have helped to reduce deficits across the 17 EU countries that use the euro but the region's debt burden rose because economic growth has flat-lined and fewer companies and households are paying their taxes.

Of the four countries that had accepted outside financial assistance by the end of 2012, Portugal and Spain saw their deficits swell in value terms and as a proportion of the size of their economies.

Portugal's deficit increased to 6.4 percent of the country's annual gross domestic product in 2012 from 4.4 percent the year before, while Spain's jumped to 10.6 percent from 9.4 percent.

Greece managed to make further inroads in cutting its borrowings but the deficit rose to 10 percent of the country's annual GDP from 9.5 percent as the country remains mired in a deep recession.

Only Ireland, widely viewed as the poster child of austerity, saw its deficit fall under both criteria. Its deficit stood at 7.6 percent of GDP against 13.4 percent the year before.

Overall in the eurozone, the deficit dropped in 2012 to around 353 billion euros ($460 billion) from 391 billion the year before, with Germany posting a dramatic improvement. Europe's biggest economy posted a 4.1 billion euros budget surplus in 2012, as against a 20.2 billion euros deficit the year before.

As a result, the budget deficit of the whole eurozone fell to 3.7 percent of the region's annual GDP.

In 2012, eurozone debt was worth 90.6 percent of the region's annual GDP, up from 87.3 percent.

Overall borrowing in the eurozone stands well in comparison with the U.S., which has a budget deficit worth around 7 percent of annual GDP.