Credit Day


Credit Day is the day when European countries’ central administrations will exhaust their annual tax revenue and start living on credit to meet their spending commitments. The publication compiled by Institut économique Molinari aims to highlight the need for significant budgetary reforms throughout Europe. Even though most EU countries improved their budget holes, the 2017 edition of the index still only highlighted 4 countries with a balanced budget or a surplus.

Briefing

Credit day: debt and deficit in a bipolar EU

4 December 2017

6 December marks Credit Day across the European Union. This is the day when, on average, European countries’ central administrations will exhaust their annual tax revenue and start living on credit to meet their spending commitments, according to a study by the Institut Economique Molinari.

Only 4 out of the 28 member states are currently in budget surplus. Among the deficit countries, France ranks worst, with both high debt and deficit levels as well as no reduction in public spending.

The EU member states’ finances show two opposite poles, with the bottom quartile struggling to reduce its public spending, resulting in large deficits and escalating debt levels. The rest of the EU28 are however showing improvements, with a declining amount of unfunded spending days.

Whilst there have been improvements, EU authorities should make greater use of the preventive arm of the Stability and Growth Pact to ensure that all EU countries continue their debt and deficit consolidation.

Download the full briefing summary here

Publication

The day European Union governments spent the last of their annual revenues

4 December 2017

EU central governments use up their resources December 6 on average, 25 days before the end of the year. This is almost seven days later than the year before, representing a significant improvement.

Among the EU’s 28 central governments, four were in surplus last year, including Sweden, with a surplus equal to 20 days’ spending, and Germany, with a seven-day surplus. Their revenues for the year enabled them to finance all of the year’s expenditures and to lower their debt.

The 24 other central government spent the last of their revenues before year’s end. Fifteen of them had consumed their resources by December and nine of them by November.

Despite this improvement, central governments remain the dark spot in European public finances. Across the EU, central governments account for most of the slippage in public accounts, with 25 unfunded days. Local governments have been balanced since 2014 (with four days’ surplus in 2016). This is also true of social security administrations since 2016 (one day’s surplus). As a result, taking all administrations together, the various EU countries had consumed the last of their public revenues 13 days before the end of the year. This is five days later than the year before.

Download the full publication here

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