Support for financial institutions increases government deficits in 2012 : upward impact of 0.4pp GDP in the EU and 0.6pp in the euro area.
Date: 2013-04-19
Institutions: Eurostat
Subjects: EU Member State, euro area, financial institution, intervention policy, monetary crisis

Economy and finance 

Author:  Martynas BACIULIS 

S t a t i s t i c s   i n   f o c u s  
10/2013 

Support for financial institutions increases 
government deficits in 2012 
Upward impact of 0.4pp GDP in the EU and 0.6pp in the euro area 

In 2012 public interventions to support financial 
institutions, notably in the form of bank 
recapitalisations, increased government deficits 
in a majority of Member States that reported 
such interventions. The increase was 
particularly large in Greece (4.0 percentage 
points of GDP) and Spain (3.6pp GDP). 

Background 

The ongoing financial crisis, which first affected 
EU Member States in the summer of 2007, has 
been addressed by public interventions of 
unprecedented magnitude. These interventions took 
various forms, ranging from direct support for 
financial institutions, to monetary policy operations 

aimed at preserving the financial stability, to 
general economic support measures as part of fiscal 
policy. 

Eurostat started collecting data on the actual and 
potential impacts on government deficit and debt, 
directly relating to the support for financial 
institutions, in October 2009.  

This issue of ‘Statistics in focus’ covers the impact 
on government deficit/surplus for individual 
Member States and European aggregates. These 
impacts can be substantial, as illustrated in figure 1 
which compares the published general government 
deficit and the net impact of government 
interventions to support financial institutions. 

Figure 1: Largest impacts of interventions on government deficit (% GDP) 

Ireland, 2010 Greece, 2012

Spain, 2012

Latvia, 2010 Germany, 2010 Portugal, 2010

0

-5

-10

-15

-20

-25

-30

-35

Published deficit

Impact of support for financial institutions

Source: Eurostat, supplementary tables for the financial crisis 

 
 
 
 
 
 
 
 
 
 
 
 
Figure 1 shows that the largest impacts to date were 
recorded in 2010 and 2012. It is likely that support 
for financial institutions will continue to have a 
substantial impact on government deficit/surplus of 
individual EU Member States in 2013. 

expenditure), and not as financial transactions 
(acquisition of equity), since they were assessed to 
be covering losses. For further information on the 
applicable statistical framework, please refer to the 
methodological notes. 

Such largely one-off impacts are often excluded in 
fiscal analysis, for instance, when assessing 
compliance with the EU-IMF programme targets. 
Therefore Eurostat is publishing, for the first time, 
government deficit/surplus figures excluding the 
net impact of interventions during the financial 
crisis. For this adjusted deficit/surplus measure 
relating to the EU, the euro area and individual 
Member States, please refer to the last section of 
this ‘Statistics in focus’. 

Impact on 2012 government 
deficit/surplus 

In 2012 public interventions to support financial 
institutions increased government deficits in 13 out 
of 19 Member States that reported such 
interventions. Eight Member States did not report 
any such interventions. 

The increase in deficits was particularly large in 
Greece and Spain. The Greek deficit increased by 
4.0pp GDP and the Spanish deficit by 3.6pp, 
largely due to the resolution and recapitalisation of 
a number of banks.  

These capital injections were treated as deficit-
increasing capital transfers (government 

It is worth noting that all capital injections, whether 
they are treated as government expenditure or as 
acquisition of equity, generally affect government 
debt, as governments need to finance them. In 
2012, the overall impact on government debt 
resulting from past and present support for 
financial institutions was estimated at 5.2% of GDP 
for the EU and 5.5% for the euro area. 

Other cases of noticeable increases in the 2012 
deficit (more than 0.2pp GDP) involved Belgium, 
Cyprus, Latvia, Austria and Portugal.  

In some EU Member States (Denmark, Ireland, 
Italy, Luxembourg, Hungary and Sweden) 
government deficits in 2012 were reduced overall 
due to government interventions. This resulted 
from fees on guarantees granted to financial 
institutions, property income (interest and 
dividends) receivable from financial instruments 
acquired by governments, and from other revenue 
such as capital taxes. 

The impact on 2012 government deficit/surplus in 
the EU, the euro area and the Member States that 
reported interventions to support financial 
institutions is summarised in figure 2. 

Figure 2: Net impacts of interventions on 2012 deficit (-)/surplus (+) (% GDP) 

E
B

K
D

E
D

L
E E

I

S
E

R
F

Y
T C

I

V
L

T
L

U
L

U
H

L
N

T
A

T
P

I

S

E
S

K
U

7
2
-
U
E

7
1
-
A
E

1

0

-1

-2

-3

-4

Source: Eurostat, supplementary tables for the financial crisis 

2 

10/2013 — Statistics in focus  

 
 
 
 
Impact on 2007-2011 government deficit/surplus 

Figure 3 shows that the largest government 
interventions to date occurred in 2010.  

Data for the year 2007 are not included in this 
figure, as interventions were undertaken only by 
the United Kingdom.  

Overall, the most significant increase in deficit due 
to government interventions in financial 
institutions is noted for Ireland (more than 26pp 
GDP, cumulated over the reference period of 2007-
2011). This impact was mainly due to major capital 
injections into banks. 

For several other EU Member States, such as 
Germany, Spain, Latvia, the Netherlands, Austria, 

Portugal, Slovenia and the United Kingdom, the 
deficit increased by a significant, but more limited, 
extent: from around 0.5pp to 3pp over the reference 
period. These impacts on government deficit 
mainly reflect recapitalisations of financial 
institutions. 

Lithuania also reported an increase in the deficit, 
but for a much smaller amount. 

In other EU Member States government deficits 
were marginally reduced due to revenues from 
government interventions. 

Figure 3: Net impacts of interventions on 2008-2011 deficit (-)/surplus (+) (% GDP) 

BE

DK

DE

IE

EL

ES

FR

IT

CY

LV

LT

LU

HU

NL

AT

PT

SI

SE

UK

0.5

0.0

-0.5

-1.0

-1.5

-2.0

-2.5

2008

2009

2010

2011

Source: Eurostat, supplementary tables for the financial crisis 

The impact of interventions on government deficit 
in the euro area and the EU, including the data for 
2012, is summarised in figure 4. Both for the EU 
and the euro area, the net impact was marginally 
deficit-increasing in 2007, 2008 and 2009, became 
much more pronounced in 2010 and decreased 
sharply in 2011. The net impact was noticeably 
deficit-increasing again in 2012, largely due to 
bank recapitalisations and resolutions. 

A spike in government expenditure for 2010 was 
mainly due to massive capital transfers to Irish 
banks as well as federal and state-level liquidation 
agencies in Germany. 

Figure 4: Net impacts of interventions on 
2007-2012 deficit (-)/surplus (+), EU-27 and 
the euro area (EA-17) (% GDP) 

2007

2008

2009

2010

2011

2012

0.0

-0.1

-0.2

-0.3

-0.4

-0.5

-0.6

-0.7

-0.8

EU-27

EA-17

Source: Eurostat, supplementary tables for the financial crisis 

  Statistics in focus — 10/2013 

3 

 
 
 
 
 
 
Government deficit/surplus excluding the impact of support for financial 
institutions 

The tables below show government deficit/surplus 
data for 2011 and 2012, excluding the impacts of 
government interventions to support financial 
institutions. 

As described above, these impacts may be positive 
(as some governments receive substantial related 
revenue, for example interest and guarantee fees) 
or negative (notably due to capital injections into 
banks and other financial institutions, treated as 
deficit-increasing capital transfers). For example, 
Spain’s deficit excluding both positive and 
negative impacts is shown as -7.1% in the table 
below, but if limited to the negative one-off capital 
transfers, the figure is -7.0%. 

The calculation of these impacts is further 
explained in the methodological notes.  

Please allow for rounding effects, as all ratios in 
table 1, including the adjusted measure of 
government deficit/surplus, are rounded to the 
nearest decimal. 

It should also be noted that this adjusted measure 
of government deficit/surplus is only intended to be 
an improvement in the presentation of data for 
users. This measure is not used for assessment in 
the context of the Excessive Deficit Procedure. 

Table 1: General government deficit/surplus excluding support for financial institutions 
(% GDP) 

EDP deficit (-)/ 
surplus (+)

2011
Impact of support 
for financial 
institutions

EU-27
EA-17
BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK

-4.4
-4.2
-3.7
-2.0
-3.3
-1.8
-0.8
1.2
-13.4
-9.5
-9.4
-5.3
-3.8
-6.3
-3.6
-5.5
-0.2
4.3
-2.8
-4.5
-2.5
-5.0
-4.4
-5.6
-6.4
-5.1
-0.8
0.2
-7.8

-0.1
-0.1
0.1
0.0
0.0
-0.1
0.0
0.0
-3.6
0.3
-0.3
0.0
0.0
0.1
-0.5
0.0
0.1
0.0
0.0
0.0
-0.1
0.0
-0.5
0.0
-0.6
0.0
0.0
0.1
0.1

 Deficit (-)/surplus 
(+) excluding 
support for 
financial 
institutions
-4.4
-4.1
-3.8
-2.0
-3.3
-1.8
-0.8
1.2
-9.8
-9.8
-9.1
-5.3
-3.8
-6.4
-3.1
-5.5
-0.4
4.3
-2.8
-4.4
-2.3
-5.0
-3.9
-5.6
-5.7
-5.1
-0.8
0.1
-7.9

EDP deficit (-)/ 
surplus (+)

2012
Impact of support 
for financial 
institutions

-4.0
-3.7
-3.9
-0.8
-4.4
-4.0
0.2
-0.3
-7.6
-10.0
-10.6
-4.8
-3.0
-6.3
-1.2
-3.2
-0.8
-1.9
-3.3
-4.1
-2.5
-3.9
-6.4
-2.9
-4.0
-4.3
-1.9
-0.5
-6.3

-0.4
-0.6
-0.6
0.0
0.0
0.2
-0.1
0.0
1.0
-4.0
-3.6
-0.1
0.0
-0.2
-0.7
-0.1
0.1
0.0
0.0
-0.1
-0.8
0.0
-0.6
0.0
-0.1
0.0
0.0
0.0
0.0

Deficit (-)/surplus 
(+) excluding 
support for 
financial 
institutions
-3.6
-3.1
-3.4
-0.8
-4.4
-4.2
0.2
-0.3
-8.6
-6.0
-7.1
-4.7
-3.1
-6.1
-0.5
-3.1
-0.9
-1.9
-3.3
-4.0
-1.7
-3.9
-5.8
-2.9
-3.9
-4.3
-1.9
-0.5
-6.3

Source: Eurostat, supplementary tables for the financial crisis 

4 

10/2013 — Statistics in focus  

 
 
 
 
 
 
METHODOLOGICAL NOTES 

This box gives some background explanation on the 
basis for collection of supplementary data on financial 
crisis, on the calculation of net impact of government 
support for financial institutions, and on the statistical 
treatment of capital injections. More exhaustive 
information and data can be found in the dedicated 
section of the Eurostat website. 

Reporting of data to Eurostat 

Eurostat collects from Member States a set of 
supplementary data on the financial crisis, following its 
decision of 15 July 2009 on the statistical recording of 
public interventions to support financial institutions and 
financial markets during the financial crisis.  

This decision provides a general framework of statistical 
rules (fully consistent with the European System of 
Accounts (ESA95)) and covers main forms of public 
interventions, notably recapitalisation, guarantees, 
purchase of assets, financial defeasance, liquidity 
operations conducted through exchange of assets, and 
the creation of temporary special purpose entities. 

Calculation of net impact of government support for 
financial institutions 

Government revenue and expenditure, relating to 
support for financial institutions and recorded in the 
national accounts for the General Government sector 
(S.13), are reported in Part 1 of the supplementary table 
for the financial crisis. 

The following elements of government revenue are 
reported: guarantee fees, interest and dividends 
receivable. 

Similarly, the following elements of government 
expenditure are reported: interest payable, capital 
injections recorded as deficit-increasing capital transfers 
(please refer to the section below) and calls on 
guarantees. 

Amounts relating to any transactions not falling under the 
most common types of revenue and expenditure listed 
above are reported under the residual (‘other’) lines (for 
both revenue and expenditure). These can cover, for 
example, expenditure on commission fees relating to 
special entities involved in the financial crisis or revenue 
fees on securities issued under special liquidity schemes. 
Member States may also report specific transactions (for 
instance, large capital transfers) under this item for 
transparency reasons. 

The net impact on government deficit/surplus (line C of 
the supplementary table) is calculated as the difference 
between total revenue (line A) and total expenditure 
(line B). 

Statistical treatment of capital injections 

The statistical treatment of capital injections is defined in 
chapter III.2 of the ESA95 Manual on Government Deficit 
and Debt (MGDD).  

A payment from the government to (re)capitalise a 
corporation, commonly referred to as a ‘capital injection’, 
is either recorded as a financial transaction (normally, an 
addition to equity (F.5) – or, in other cases, to loans (F.4) 
or securities other than shares (F.3)), recorded in the 
financial account with no impact on government 
deficit/surplus, or as a non-financial transaction (capital 
transfer (D.9)), that is government expenditure with a 
negative impact on deficit/surplus. In some specific 
cases, the recording could be a combination of the two, a 
financial transaction and a non-financial transaction.  

To further clarify the rules applicable to the special case 
of capital injections into financial institutions, Eurostat 
published two guidance notes: on the statistical recording 
of public interventions to support financial institutions and 
financial markets during the financial crisis on 
29 September 2009 and on the impact of bank 
recapitalisations on government finance statistics during 
the financial crisis on 18 July 2012.  

The statistical treatment of capital injections into financial 
institutions depends on the circumstances of the 
recapitalisation: 

-  Where government purchases, without taking 

control of the financial institution, shares traded 
on an active market, it is necessary to compare 
the price paid by the government with the 
prevailing market price. Any excess of the price 
paid by the government over the prevailing 
market price is recorded as a deficit-increasing 
capital transfer. 

-  Where government injects funds in the form of 
other instruments considered as capital, the 
recapitalisation is treated for its entirety as a 
financial transaction with no impact on 
government deficit/surplus. Such treatment is 
only applied if the financial instrument used 
ensures a sufficient non-contingent rate of 
return, as decided by Eurostat on 19 March 
2013. 

More challenging cases where the injection is not in the 
form of traded shares or other above-mentioned 
instruments, commonly when government injects funds 
into a private institution without any contribution by 
private shareholders or into a public financial institution 
(that is an institution already under its control) are dealt 
with under the general framework defined in MGDD. 

  Statistics in focus — 10/2013 

5 

 
 
 
 
 
Further information 

Eurostat website: http://ec.europa.eu/eurostat 

Data on government interventions during the financial crisis 
http://epp.eurostat.ec.europa.eu/portal/page/portal/government_finance_statistics/excessive_deficit/supplementary_ta
bles_financial_turmoil 

Further information about Government Finance Statistics 
http://epp.eurostat.ec.europa.eu/portal/page/portal/government_finance_statistics/introduction 

Journalists can contact the media support service: 

Bech Building, Office A4/125, L-2920 Luxembourg 
Tel.: (352) 4301 33408  
Fax: (352) 4301 35349 
E-mail: eurostat-mediasupport@ec.europa.eu 

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Their role is to provide help and guidance to Internet users of European statistics. 

Contact details for this support network can be found on the Eurostat website at: 
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Manuscript completed on: 19.04.2013 
Data extracted on: 19.04.2013 
ISSN 1977-0316 
Catalogue number: KS-SF-13-010-EN-N 
© European Union, 2013