Proceedings from the ECFIN Workshop "The budgetary implications of structural reforms" - Brussels, 2 December 2005



Table 2. Gross and net debt development

Gross debt
% of GDP

Net debt
% of GDP

Change in

Gross debt

Net debt

2005

2005

1993

2005

Nordic model

Sweden

61

-6

-18

-16

Finland

48

-41

-4

-24

Denmark

48

2

-11

-23

Netherlands

66

-28

-32

-7

Austria

65

39

3

-2

Anglo-Saxon model

United Kingdom

46

39

-3

6

Ireland

30

..

-65

..

Portugal

78

46

01

201

Continental model

Germany

72

61

24

33

France

74

45

22

17

Belgium

100

90

-45

-38

Mediterranean model

Italy

121

98

-51

-31

Spain

53

31

-14

-10

Greece

108

..

-2

..

1. 1995-2005

Source: OECD, Economic Outlook No. 77 database.

16. A similar pattern emerges when looking at growth performance and fiscal policy (Figure 4). In
the period 1999-2005, trend growth was only 1½ per cent per year on average in the three major euro area
countries, but 3¼ per cent in the smaller countries. Faster growth coincides with a strong fiscal
performance, while the contrary tends to be true for the slower-growing countries. Econometric work
provides evidence that fiscal consolidations are more likely to be undertaken and successful if trend
economic growth is high (von Hagen, 2002). At the same time, the smaller fast growing-economies were
able to maintain fairly rapid growth in public spending while keeping their government deficits in check.
Greece is of course an important exception with soaring spending and a whopping government deficit
despite strong growth.

1999-2005


Cyclically-adjusted

Source: OECD, Economic Outlook No. 77 database.


Figure 4. Trend growth and fiscal policy

average

Growth in real


50




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