bruno deletré executive vice-president public finance, dexia

Bruno DeletréExecutive Vice-President Public Finance, Dexia

20 December 2006, Brussels

Local and regionalpublic finance in the European Union

Trends 2000-2005

EC

ON

OM

IC O

UTLO

OK

2006 Economic Outlook : Local and Regional Public Finance in the European Union

AustraliaAustriaBelgiumBulgariaCanadaCzech Rep.FranceGermanyHong-KongItalyIrelandIsraelJapanLuxembourg MexicoThe NetherlandsPolandPortugalRomaniaSingaporeSlovakiaSpainSwedenSwitzerlandUnited Kingdom United-States

24 000 people in 26 countries

A European bank with an international dimension

Public/Project

Finance and

Credit

Personal

Financial

Services

Investment

Management

and Insurance

Treasury

and

Financial

DEXIA

Public/Project

Finance and

Credit

Personal

Financial

Investment

Management

and Insurance

Treasury

and

Financial

DEXIA

Public & Project Finance & Credit

Enhancement

Personal Financial Services

Asset management & insurance

services

Treasury & Financial Markets

Organised around 4 business lines


Research activities on the European territorial public sector

Periodical… the annual Economic Outlook on sub-national public

finance in the European Union and the set of factsheets

Paper and electronic

publications : • The newcomer : local

government staff

• Books planned for 2007-2008 : Hospitals,

local and regional finance in the EU27,

social housing in Europe

Synoptical tables…

LPC, hospitals…


2006 new publications

• The Economic Outlook on "Sub-national public finance in the EU – Trends 2000 – 2005" : An annual survey (6th edition)

Institutional and financial situation of the sub-national public sector in the 25 EU Member States

• A set of fact sheets detailing key data on the EU Member States’ local and regional public sector Detailed statistics for each country

Sub-national governments, economic weight and financial aspects of the sub-national public sector, structural funds 2007-2013, town twining.


Presentation

• Territorial organisation in Europe

• The economic weight of the regional and local governments*:

Territorial public expenditure

Territorial public capital expenditure

Territorial public fiscal revenues

• Local and regional public deficit and debt

* In the following presentation, financial data relates mainly to the "local and regional public sector ("territorial") as opposed to the "sub-national public sector" which includes the Federated States


A great variety of territorial organisation in Europe

•Around 89,200 territorial governments in Europe

•Three federal countries

•22 unitary countries organised in 1, 2 or 3 tiers:

8 countries with 1 level

8 countries with 2 levels

6 countries with 3 levels

89,250 sub-national governments with the Federated States


Czech Rep.France

SlovakiaCyprusHungary

AustriaLuxembourg

LatviaSpainEstonia

MaltaGermanyItaly

SloveniaGreeceFinland

PolandBelgiumDenmark

Sw edenPortugal

NetherlandsIreland

Lithuania

United Kingdom

- 20 000 40 000 60 000 80 000 100 000 120 000 140 000 160 000

Municipality average size in the EU:

5,180 inh.

88,000 municipalities in the EU

Slovakia3%

Hungary4%Czech Rep.7%

Italy9%

Spain9%Germany

14%

France42%

¾ of the total number of European

municipalities are located in 4 countries


Institutional and territorial trends

Further decentralisation More regionalisation

Inter-municipal cooperation Mergers of municipalities

1999 : 16 regions in Poland 2001 : 14 regions in Czech Republic 2002 : 8 regions in Slovakia 2007 : 5 regions operational in

Denmark 2009 : 14 regions operational in

Slovenia

Number of communities with own fiscal resources in France

1102

1845

2524

1995 2000 2005

Reduction of the number of municipalities

527

270

176

98

Today TodayIn 2009 In 2007

Latvia Denmark

Evolution of the budget of the Spanish Autonomous Communities

49 000

133 000

1995 2005

X 2,7

Creation of regions:


Territorial public expenditure in 2005: 12.7 % of GDP

Malta

Cyprus

Greece

Luxembourg

Portugal

Ireland

SlovakiaBelgium

Germany

Austria

Lithuania

Estonia

Slovenia

Latvia

France

Czech Rep.

UK

PolandItaly

Netherlands

Finland

Spain

Denmark

Sweden

Hungary

0 5 10 15 20 25 30 35

In % of GDP


Evolution of the territorial public expenditure 2000-2005

100

104

108

112

116

120

2000 2001 2002 2003 2004 2005

GDP

Total public sector expenditure

Territorial sector public expenditure

In volume, base year 2000 = 100

+ 3.6%

+2.4%

+1.7%

1,374 bn€


Average yearly territorial expenditure growth 2000-2005: +3.6%

AustriaMalta

GermanyPortugalNetherlands

ItalyDenmarkPolandBelgiumSloveniaSwedenLatvia

LuxembourgFrance

FinlandLithuaniaUnited Kingdom

SpainHungary

GreeceEstonia

Czech Rep.Ireland

CyprusSlovakia

-5% 0% 5% 10% 15% 20% 25% 30%

In % in volume


Evolution of the territorial public investment 2000-2005

100

104

108

112

116

120

2000 2001 2002 2003 2004 2005

GDP

Total public sector investment

Territorial sector public investment

In volume, base year 2000 = 100

+3%

+1.7%

+2.9%

169 bn€


The importance of the territorial public sector as a public investor

Breakdown of investment between public actors in 2005

Local and regional sector

63.9%

Rest of the public sector

33.2%

Federated States2.9%


Territorial public investment / public investment in 2005: 63.9%

MaltaLithuaniaCyprus

EstoniaGreece

LuxembourgHungary

SloveniaAustriaCzech Rep.

BelgiumSweden

GermanySlovakiaLatviaUnited Kingdom

PolandNetherlandsFinland

DenmarkFrancePortugalIrelandSpain

Italy

0 20 40 60 80 100

In % of total public investment

Highest growth in volume in 2005 (%)

0%

10%

20%

30%

40%

50%

60%

Spain Slovenia Poland Greece Cyprus Belgium Slovakia Latvia

EU local and regional average in 2005 : +1.4%


A global contract between a

public entity and a private

one to design, build, finance,

operate and maintain an asset

in order to provide a service

to the public sector in return

of an ongoing fee based on

avaibility or demand.

PPP, an alternative to purely public or privately financed projects


Green paper of the European Commission (April 2004) Eurostat rules on the accounting status of PPP (February 2004) Non legislative resolution of the European Parliament (October 2006) European PPP Expertise Centre (EIB)

Italy

PPP legislation since 2005

Transportation Education Healthcare

Greece

Germany PPP Task Force since July 2004 Homeland security Education Infrastructure

Finland Transportation Education

Netherlands PPP Task Force 1999 Transportation Water Ports

Belgium PPP legislation forthe Flemish region Transportation Water/Sewage Education Healthcare

Ireland PPP Act of 2002 Transportation, Water/Sewage Education

Spain

France LOPSI, LOPJ specific legislation since 2004 Transportation Prisons Education Homeland security

Portugal PPP legislation since 2003 Infrastructure Prisons Healthcare

2003 law on concessions Transportation Infrastructure Healthcare

PPP legislation since 2002 Transportation Healthcare

UK PFI initiative since 1992 Transportation Education Healthcare

Transportation Education Healthcare

Luxembourg

The regulatory framework in Europe

: countries with a strong PPP culture


Evolution of territorial tax revenues 2000-2005

95

100

105

110

115

120

125

130

2000 2001 2002 2003 2004 2005

GDP

Public sector

Territorial public sector+4.5%

+1.7%

+0.9%

510 bn€

In volume, base year 2000= 100


Malta

Greece

Cyprus

Ireland

Netherlands

Luxembourg

United Kingdom

Portugal

Belgium

Lithuania

Germany

Slovenia

Slovakia

Estonia

Poland

Hungary

Austria

France

Latvia

Czech Republic

Italy

Finland

Spain

Sweden

Denmark

0 5 10 15 20

In % of GDP

Territorial tax revenues in 2005: 4.7% of GDP

Highest growth in GDP between 2000 and 2005

SlovakiaPoland Hungary

France

Czech Republic

Spain

0

2

4

6

8

10

12

2000 2005

% of GDP


The territorial public deficit is under control: 0.23% of GDP in 2005

-3,5

-3,0

-2,5

-2,0

-1,5

-1,0

-0,5

0,0

0,5

1,0

2000 2001 2002 2003 2004 2005

Local and regional budget balance

Total public budget balance

In % of GDP

- 25 bn€

- 252 bn€


The territorial public debt remains stable over 2000-2005

0

1

2

3

4

5

6

7

8

2000 2001 2002 2003 2004 2005

% of GDP

633 bn€


Malta

Slovenia

Greece

Lithuania

Slovakia

Hungary

Poland

Cyprus

Luxembourg

Ireland

Estonia

Latvia

Czech Republic

Portugal

Denmark

United Kingdom

Finland

Sweden

France

Italy

Netherlands

Spain

Austria

Belgium

Germany

0 5 10 15 20 25 30

In % of GDP

The territorial public debt in 2005: 5.8% of GDP

Highest growth in GDP between 2000 and 2005*

* Including Federated States

Poland Latvia PortugalFinland Sweden

Italy

Germany

0

5

10

15

20

25

30

2000 2005

% of GDP


Debt breakdown by public actors in the GDP

0 20 40 60 80 100

Estonia

Luxembourg

Latvia

Lithuania

Ireland

Slovenia

Czech Rep.

Slovakia

Denmark

Finland

Poland

United Kingdom

Spain

Sweden

Netherlands

Hungary

Austria

Portugal

France

Germany

Cyprus

Malta

Belgium

Italy

Greece

Territorial public sectorFederated States

Rest of public sector


Conclusion

• The decentralisation process is continuing in Europe

• Local and regional governments have become major actors in the European economies : their expenditure account for 12.7% of GDP

• The local and regional public sector is the leading public investor : it ensures 63.9% of all public investment

• Local and regional fiscal ressources are growing, mostly to compensate the financial costs of the new responsibilities: +4.5% per year in volume over 2000-2005

• Local and regional public deficit and debt remain limited: respectively 0.2% and 5.8% of GDP.

• Important cross-national variations

bruno deletré executive vice-president public finance, dexia

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