ALL 15 nations that use the euro brought their yearly budget deficits under a European Union limit last year, the bloc's statistical agency Eurostat said yesterday, as European governments reaped tax windfalls from the recent economic boom.
That puts the euro area in good shape as growth winds down this year on the United States slowdown and a banking crisis that limits investments and makes it harder for businesses and home buyers to get credit.
Italy and Portugal - the two euro nations that had run a deficit above 3 percent of gross domestic product - fell under the EU maximum in 2007, Eurostat said.
Italy reported a budget deficit of 1.9 percent - down from 3.4 percent in 2006, thanks to a vigorous debt-cutting effort by the government of outgoing Prime Minister Romano Prodi.
The country's overall debt is still the highest in the European Union at 104 percent of GDP. EU officials have urged Rome to tackle this, warning that it is spending large sums of public money to service this borrowing.
Portugal also has drafted tight spending curbs to bring its deficit down to 2.6 percent from 3.9 percent the previous year.
The EU budget rules are aimed at keeping the shared currency stable. Last year, the nations struck an informal deal to eliminate budget deficits by 2010- a goal Italy and France have warned they may have to delay.
France is still close to the EU limit, running a deficit of 2.7 percent in 2007, higher than the 2.4 percent it reported a year earlier. Greece, too, is sailing close to the limit at 2.8 percent, with statistical checks still continuing on how Athens should count EU grants.
The largest euro economy, Germany, eliminated its budget deficit, reporting 0 percent last year, down from 1.6 percent in 2006.
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