Greek deficit rocks EU

Deficit

Estimates by the Greek government that place the nation's deficit at more than 10 percent of the country's gross domestic product have stunned EU ministers.

The news comes via Greek finance minister George Papaconstantinou, who announced at a meeting in Luxembourg that the nation's deficit should be between 10 percent and 12 percent of the nation's GDP.

His warnings come despite recent estimations from Eurostat, the official data office of the European Union, who put the deficit at only 3.7 percent of Greece's GDP.

Estimates

At the meeting where Papaconstantinou heeded his warning, Luxembourg's Prime Minister Jean-Claude Juncker displayed something of a dry wit by announcing he was "very impressed by the difference between the old and new figures."

More seriously, Joaquin Almunia, the European Commission's economic commissioner, warned that the "serious discrepancies" are likely to result in an open and deep investigation.

The estimates by the Greek government are really only the tip of the iceberg, however.

20 of the 27 European Union now have deficits larger than the amount permitted by the EU's Stability and Growth Pact agreement, which prescribes a deficit of no more than three percent of GDP during normal economic times.

Of course, these are anything but "normal" times for the economy.

In fact, most recent reports show that exports from the eurozone decreased 5.8 percent in August and imports fell 1.3 percent.

In addition, reports show that trade surplus fell to four billion euros from the 11.3 billion a year ago. And in Germany, where the government has now lifted its economic outlook for the current year on higher exports, the nation has estimated weak domestic consumption.

The deficit in France, meanwhile, is predicted to reach 8.5 percent of GDP in 2010.

As for the Papaconstantinou conundrum however, EU ministers have dragged the Greek government over the hot coals while an investigation into the discrepancies gets underway.

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