Euro zone Q1 deficit falls to decade low

BRUSSELS: The euro zone´s public deficit dropped in the first quarter of the year to its lowest level in nearly a decade, driven by a widening surplus in Germany and despite France´s increasing fiscal gap, data released on Thursday showed.

The figures, published by the European Union´s statistics office Eurostat, confirmed the improving state of the bloc´s public finances, although public debt increased in the first quarter driven by a further expansion of Italy´s debt, the second largest in the 19-country currency bloc.

Eurostat said that government deficit in the euro zone dropped to 0.9 percent of output in the first quarter of the year from 1.1 percent in the previous quarter, confirming a long-lasting downward trend.

It was the lowest level of public deficit since the last quarter of 2007, when the global financial crisis began hitting euro zone´s economies forcing higher public spending to prop up the financial sector.

The fall in the bloc´s fiscal gap was helped by Germany´s thrift, as the bloc´s largest economy further expanded its surplus to 1.5 percent of output in the first quarter from 1.4 percent in the last quarter of 2016, and 0.7 percent in the third quarter of last year.

The widening of the surplus goes against calls on Germany from other euro zone countries and European Union institutions to increase spending and rise wages to help strengthen the bloc´s recovery.