Spot the Difference

Here’s a graph of a decade’s worth of data from Eurostat on the General Government Deficits in Ireland and Greece. Click to enlarge.

The estimate from each country for 2010 is also provided, and represented by the dashed lines.  I can’t see much difference for the most recent data. 

The EU’s Stability and Growth Pact target of a GGD of no more than 3% of GDP is shown with the dashed red line. Through most of the 2000s this was of no real concern in Ireland as we ran a series of budget surpluses.  This changed in 2008 as we plunged in deficit.

The only year Greece met the 3% limit was 2006 (2.9%).  In all other years Greece ran a budget deficit of more than 3% of GDP.

For the past three years the similarity between the two is striking.

Year	Ireland	Greece
2008	-7.2%	-7.7%
2009	-11.7%	-12.5%
2010E	-11.6%	-13.0%

Why then has the international reaction to the two countries being so different? 

The following graph shows the gross debt position of both countries for the past decade.  We are starting from a position of a much lower debt base and have been well below the Stability and Growth Pact limit of a debt to GDP ratio of 60% (shown in red). Again click the graph to enlarge.

For a  country running annual budget deficits the Greek gross debt figures look remarkably stable until very recently.  Why is this? Greece cheated!