Dozens of European Countries Increasingly Struggling, Deficits Ballooning
Fiscal pressures in Europe are intensifying once again, with several countries recording widening budget deficits amid economic slowdowns and surges in government spending.
European fiscal rules set a deficit limit of 3% of Gross Domestic Product (GDP). However, the latest data indicate that many countries have significantly exceeded this threshold.
This surge in deficits is inseparable from the legacy of policies during the pandemic, when governments ramped up spending massively to support the economy. These pressures persist due to weak economic growth, energy shocks, and increased defence spending amid geopolitical tensions.
Romania, Poland, and Belgium are recorded as the countries with the largest budget deficits in Europe, at (-7.3%), (-5.8%), and (-5.7%) of GDP respectively. These high deficits highlight significant fiscal strains, where government expenditures far exceed revenues.
Geopolitical and Energy Factors Driving Deficits
The war in Ukraine has become one of the main factors driving the increase in deficits, particularly in Eastern European countries. Poland, for instance, has a deficit of 5.8% of GDP, largely triggered by a surge in defence spending since 2022. As a frontline NATO country, Poland has aggressively increased its military budget to respond to geopolitical threats.
Additionally, the energy crisis following Russia’s invasion has forced governments to allocate substantial budgets for energy subsidies and price stabilisation. The combination of external pressures and domestic needs has prolonged the period of high deficits in many countries.
The three largest economies in Europe—France, Germany, and Italy—show varying fiscal conditions. France (-5.4%) and Italy (-3.4%) remain above the EU’s 3% of GDP deficit limit, while Germany (-2.8%) is still slightly below the threshold.
Germany, known for its fiscal discipline, is now facing pressures from the pandemic, energy crisis, and economic slowdown, leading it to relax its debt rules to boost investment.
On the other hand, France is hampered by political issues in controlling its budget, while Italy is burdened by very high public debt, limiting its fiscal space.
What about in Indonesia?
The realisation of the State Revenue and Expenditure Budget (APBN) through the end of March 2026 recorded a deficit of Rp240.1 trillion or 0.93% of Gross Domestic Product (GDP).
State revenues reached Rp574.9 trillion, growing 10.5% (year on year/yoy). Taxation contributed Rp462.7 trillion (14.3%), with the largest contribution from taxes at Rp394.8 trillion (20.7%). Meanwhile, customs duties amounted to Rp67.9 trillion (-12.6%).
State expenditures have been realised at Rp815 trillion (31.4%). The central government disbursed Rp610.3 trillion (47.7%) and transfers to regions Rp204.8 trillion (-1.1%).
“When there is a deficit, don’t be surprised, because the APBN is designed with a deficit. This is something normal; the important thing is that we continue to monitor it,” said Purbaya in a working meeting with Commission XI of the House of Representatives (DPR RI) on Monday (6/4/2026).
In 2025, the deficit reached 2.92% of GDP, much higher than in 2024 at 2.29% of GDP.