The EU27 external current account recorded a deficit of 21 billion euro in the fourth quarter of 2008, compared with a deficit of 14.2 billion euro in the fourth quarter of 2007 and a deficit of 60.8 billion in the third quarter of 2008, European statistics office Eurostat said on March 11 2009.

In the fourth quarter of 2008, the EU27 external balance of trade in services recorded a surplus of 23 billion euro, compared with a surplus of 19.7 billion euro in the fourth quarter of 2007 and a surplus of 19.3 billion in the third quarter of 2008.

The EU27 includes Belgium, Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Malta, the Netherlands, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, Sweden and the United Kingdom.

Eurostat said it had used a revised methodology for the new figures, which at this stage remain provisiona. As a result, the figures for the current account have been revised from the first quarter of 2004.

Eurostat said that the reason for the methodological change was that the counterpart of a portfolio investment transaction (for example the purchase of shares on the stock exchange) was difficult to identify.

"In fact, it is not straightforward to identify the foreign owner/holder of the domestic securities issued because the transaction is handled by custodian banks and clearing houses, mostly based in the EU. Hence, the Member States had difficulty in providing the split of this item between intra and extra-EU," Eurostat said.

The new method better estimates the share of portfolio investment income debits and of portfolio investment liabilities that can be allocated outside the EU.

This improvement also allows the calculation of the EU aggregate for portfolio investment liabilities, which will be published for the first time together with other items of the financial account when the second estimate of the current account are published.

The application of the new method will lead to an improvement in the quality of EU balance of payments statistics, by reducing the intra-EU asymmetries in the income account by using a more accurate intra/extra EU split of portfolio investment income debits, Eurostat said.

Moreover, the comparability of balance of payments statistics will be enhanced, by aligning the methodology of the EU and the euro area balance of payments statistics.

"However, this improved estimate of portfolio investment income paid outside the EU leads to a worsening of the current account balance.

"On average, the downwards revision of the current account balance of the EU for the quarters already published (2004Q1-2008Q3) is about 0.5 percentage points of GDP, and is more marked in the second quarter of each year, when dividends are generally paid," Eurostat said.

"It should be noted that, as this revision involves the split of transactions between intra and extra-EU, there is no change to the current account balance of individual member states," the statement said.