Official EU statistics show that Ireland again recorded the biggest budget deficit in the EU last year. Ireland's deficit was 32.4% of economic output, though this was mainly because the EU figures include the cost of injecting more money into Anglo Irish Bank and Irish Nationwide.

Greece had the second-biggest deficit at 10.5% of GDP, while the UK was third with 10.4%. Spain and Portugal recorded just over 9%.

The EU's statistics body Eurostat added around €4 billion to the UK's reported deficits over the past four years, expressing 'reservations' over military spending and domestic bank bail-outs.

This was due to 'uncertainties' about when military spending is reported as well as funds pumped into Bradford & Bingley and Northern Rock by the previous Labour administration under Gordon Brown.

Meanwhile, Greece's deficit shot up to 10.5% of GDP as experts increasingly anticipate a need for the country to restructure its giant debts estimated at almost €330 billion.

Greece had originally aimed to squeeze the deficit down to 8.1% of GDP last year, from 15.4% in 2009, as part of a deal last year to overhaul its economy and slash public spending in return for a €110 billion EU-IMF loan.

Finance Minister George Papaconstantinou acknowledged earlier this month that the deficit would be 'higher than 9.5%', without giving any figure.

Across the 17-nation euro zone, the average deficit in 2010 fell to 6%, from 6.3% in 2009, Eurostat said.

That is still double the notional permitted limit under an EU agreement, the Stability and Growth Pact, that is currently being re-written to introduce financial sanctions for states that repeatedly breach shared targets.

22 of the 27 EU states were in deficit above the 3% mark, with only Estonia recording a surplus and Sweden in balance.

The combined debt-to-GDP ratio for the euro zone increased from 79.3% at the end of 2009 to 85.1% at the end of 2010 - with 14 of the EU 27 coming in above the notional 60% limit on this category. Ireland had the fourth-highest ratio at 96.2%, behind Greece, Italy and Belgium.