New record in local investment in Europe in 2006 - Sub-national (i.e. local and federate authorities and public bodies attached to them) public sector investment in the European Union, with almost €200 billion, reached record levels in 2006 (up 6.6% on 2005), thanks largely to the 12 new member states, says the European Public Finances Outlook (Lettre de conjuncture des finances publiques européennes) published by Dexia on 31 January, which looks at trends form 2000 to 2006. Since the latest enlargement to 27 member states, there are now 91,252 local and regional authorities which, in 2006, allocated some €196 billion to upgrade facilities (roads, public transport, schools, etc.), corresponding to 67.4% of all public investment spending in the EU. This remarkable increase is the highest since 2000 (between 2000 and 2006, the average annual growth rate was 2.8%). This level reached almost 30% in the 12 new member states, where growth was driven by substantial infrastructure and public facilities needs, the implementation of European Community programmes 2004-2006 and Romania and Bulgaria's EU accession preparations. In total, European local and regional authorities invested an average of €400 euro per inhabitant per year in infrastructure and facilities, more than one euro per person per day. Last year, local and regional authorities spent €1,825. Thus, they account for a little over a third (33.6%) of all public spending in the EU (€5,425 billion in 2006) and 15.7% of European GDP (12.7% in 2006). Danish and Swedish local authorities still lead the way in terms of spending as a part of national GDP, with ratios of 33.4% and 25% respectively. Countries with a federal structure, like Germany, where the Länder have nonetheless begun to reduce spending, follow not far behind, then come centralised states like the United Kingdom (12.9%) and France (11.1%) and the 12 new member states, whose local authorities are beginning from a very low starting point (6.8% for Bulgaria and 6.6% for Slovakia), but are quickening their step. This dynamism has not affected the good financial health of the sub-national public sector, whose need for funding and level of debt remain low, Dexia says. The spending growth curve followed that of revenue (+3.6%), which improved tax revenue (up 4.8%) and the good economic performance of several countries (growth up 3% in the EU27in 2006) helped increase. In such conditions, the need for funding and the level of debt (€1,190 billion) remain low, the study concludes.