sexta-feira, agosto 24, 2012

Germany and Portugal miss budget targets

Ver comentários do Conselho Consultivo sobre a execução orçamental em Portugal no que vai de 2012

We do NEED  a turning point in the Eurozone, because the current divergent trends are unsustainable, and not at all surprising. 

Everyoney follows the news of  yawning periphery budget deficts, as the recessions shrink tax revenues and inflate budget spending on unemployment benefits and other safety nets.

But the real  news is the "surprising" German budget surplus of 0,6% of GDP in first semester, all of €8.3 billion of it, the first since 2007-2008.   This represents an annual  "forecast error" equivalent to  €19 billion, considering  the -0,5% German deficit budgeted for the whole of 2012.  

By contrast, Portugal's  valiant efforts to cut Government staff costs,  by 16,1% from €5,9 billion to €4,9 billion in the first semester of 2012, were insufficient in the cushion the impact of falling tax revenues.

When it comes to missing budget targets, the "unexpected" German budget surplus is the critical   "man bites dog" news, Eurozone edition, and it augurs nothing good for the Eurozone.

With such divergence of fortunes, even the apparent "winners" will certainly become losers.

Sources:, economico,
Testing the Limits of Divergence in the Eurozone