There are only four countries in the European Union that will reduce their deficit more than Portugal in 2021. This is the case for Spain, Luxembourg, Belgium and Croatia.
The Portuguese government plans to reduce the budget deficit between 2020 and 2021 by 1.2 percentage points, from 5.7% of GDP last year to 4.5% this year. This forecast appears in the Stability Programme 2021-2025, a document that the 27 member states had to deliver in April. What are the other European countries planning to do? At least 11 countries will increase the deficit and 12 will decrease it, but some more than others.
Member states have given themselves carte blanche to spend in 2020 and 2021, but some are enjoying it more than others, as Eurostat’s statistics for last year have already shown. Portugal was in the middle of the table of the lowest deficits in the European Union and this year it is going the same way: according to the Stability Programmes delivered by 23 countries so far, Portugal’s deficit will be the fourth lowest in 2021, only surpassed by Sweden, Croatia and Luxembourg.
But more than the figure itself, what matters is the direction of the budgetary balance in relation to 2020, taking into account the epidemiological situation of each member state and the economic impact of the pandemic. As ECO wrote, the data for 2020 show that, among the EU economies that fell the most, Portugal was the one that controlled the deficit the most.
In 2021, the 4% growth predicted by António Costa’s government is in the middle of the table in terms of GDP, between those that grow less like Austria (1.5%) and those that grow more like Spain (6.5%). However, in terms of the deficit, Portugal is among the countries that will consolidate the most this year, despite the suspended European budget rules.
The Portuguese deficit reduction of 1.2 percentage points this year, equal to that of Romania, is only surpassed by Croatia (-3.6 percentage points), Spain (-2.6 percentage points), Luxembourg (-2.1 percentage points) and Belgium (-1.7 percentage points).
Except for Luxembourg, the other three countries have a deficit well above Portugal’s in 2020. In the case of Belgium and Spain, despite having a larger decrease, the deficit will still be higher than in Portugal.
According to the European Commission’s website, Cyprus, Denmark, Finland and Slovakia have not yet delivered the Stability Programme and are therefore not included in this analysis.