The contraction of around 1 percentage point in the output gap (measured according to the EU methodology with a time horizon of four years underpinning the macroeconomic forecast) reduced the negative cyclical component of the deficit by more than half a percentage point of GDP; on the other hand, the cyclically-adjusted primary surplus, reflecting the expansionary stance of budgetary policy in 2016, contracted by a similar amount.
The further diminution in interest payments (0.2 percentage points) enabled net borrowing to fall this year as well. The deterioration is greater than that indicated in the EU Council’s Recommendations of last July, taking into account the margins of flexibility recognized mainly for structural 6  reforms and investment.