The government deficit of the euro zone fell in 2007, compared with 2006, while the government debt increased in absolute terms, the European Union (EU)'s statistics bureau Eurostat said yesterday.

In the 15-nation bloc that uses the singe currency euro, the government deficit decreased from 1.3 percent of gross domestic product (GDP) in 2006 to 0.6 percent in 2007, and the government debt to GDP ratio fell from 68.5 percent at the end of 2006 to 66.3 percent at the end of 2007, Eurostat said.

It was the same with the 27-nation EU, where the government deficit fell from 1.4 percent to 0.9 percent and the government debt to GDP ratio decreased from 61.3 percent to 58.7 percent.

In 2007 the largest government deficits in percentage of GDP were recorded by Hungary, Greece and Britain. Twelve EU member states registered a government surplus in 2007. In all, 16 member states recorded an improved government balance relative to GDP in 2007 compared with 2006, and 11 a worsening.

At the end of 2007, the lowest ratio of government debt to GDP was recorded in Estonia, which was only 3.5 percent. Eight member states had government debt ratios higher than 60 percent of GDP in2007, including Italy, Germany and France.

Eurostat said Britain's 26.9 billion pound (44 billion U.S. dollars) loan to troubled lender Northern Rock should be counted as government debt, raising British debt to 44.9 percent of gross domestic product for the fiscal year ending March 2008, instead of the 43.2 percent figure Britain has put forward.

But the bailout did not affect Britain's yearly budget deficit, which was 2.8 percent last year, close to an EU limit of three percent.

In 2007, government expenditure in the euro zone was equivalent to 46.1 percent of GDP, and government revenue to 45.5 percent. The figures for the EU27 were 45.8 percent and 45.0 percent respectively. In both zones, the government expenditure ratio decreased between 2006 and 2007, while the government revenue ratio increased slightly.