Synthesis Report - European Commission - Europa

Synthesis Report Ex-post Evaluation of the ERDF 2000-2006
and Slovakia, especially the former, where the deficit increased between these two years,
signifying an expansionary fiscal policy. In Hungary, this led to financial problems and a
significant tightening of policy in 2007 and 2008.
Policy was also expansionary in the three Baltic States, where the high rate of growth would
otherwise have led to a much more substantial reduction in the deficit or increase in the surplus.
In the Czech Republic, Poland and Slovenia, fiscal policy seems to have been largely neutral over
the period. In both Cyprus and Malta, however, there is evidence of some tightening in budgetary
policy after entry into the EU.
2.2.4 Government fixed investment over the programming period
The budgetary policy pursued over the period is reflected to some extent in the funding made
available for public investment 12 , which tends to be the category of government expenditure
which can most easily – or less painfully – be postponed. There is still, however, a political choice
over the items of expenditure to be reduced if government spending is cut back when the budget
is tightened, so there is no automatic link between fiscal restraint and reductions in investment.
Nevertheless, in most of the countries in which budgetary policy was relatively restrictive over the
period, especially the latter part, public investment was comparatively low in relation to GDP. This
was the case in Germany, Austria, Belgium, Denmark and Italy, while in the Netherlands, public
investment was much higher but was reduced after 2003 (Table 2.2). It was not the case in
Sweden, however, where despite the tightening of fiscal policy, public investment remained
relatively high and was increased slightly as a share of GDP. This was also the case in France,
where policy also seems to have been tightened over the period, if by less.
In Portugal, the tightening of fiscal policy was reflected in a marked cutback in public investment
which was reduced from almost 4% of GDP in 2001 to only just over 2% of GDP in 2008.
In Greece, public investment was relatively high in the early years of the period up until the
Olympic Games and then was reduced significantly in 2005.
In Spain and Ireland, public investment remained high throughout the period, while in the UK,
there was some increase, reflecting the expansionary nature of policy, even if the level of
investment was relatively low 13 .
12 For regional development, government investment is the most relevant category of government expenditure.
Ideally, as argued above, the focus should be directly on national government expenditure on regional development,
but this cannot be identified in the public sector accounts of any country. Nor can the necessary data be extracted
easily from national published sources. Indeed, in most cases, the data cannot be extracted at all, so there are no
statistics on development expenditure at national level which can be compared with the expenditure financed by the
Structural Funds. A further problem is that the data for government investment are defined in the ESA 95 system of
national accounts to be net of sales less purchases of assets. This means that they do not measure ‘new’ fixed
investment as such if there are asset transactions (if the government, for example, sells a building or a piece of land
or shares in a public company), Since such transactions have tended to become more important over time, with the
trend towards privatisation, the figures for government investment have become less and less reliable as a measure
of new investment. It is assumed here that asset transactions are small and do not have a significant distorting
effect on the investment, figures, but this may well not be the case.
13 It should be noted that in the UK especially, the figures for government investment are distorted by the sales of
assets, which are counted as negative expenditure and so as an offset to expenditure on fixed investment, and
which tend to be more important than in other countries, The decline in investment in 2005 seems to be entirely a
consequence of an increase in such sales.
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