Today the European Commission examined the updated programmes of 17 EU countries.
Article created February 18, 2009.
What is the legal background?
According to Council Regulation (EC) No 1466/97 on the strengthening of budgetary surveillance and the surveillance and coordination of economic policies, Member States must submit updated macroeconomic and budgetary projections every year. Such updates are called stability programmes in the case of countries that have adopted the euro, and convergence programmes otherwise. This regulation is also referred to as the 'preventive arm' of the Stability and Growth Pact. Under its "corrective arm", the Pact requires the Commission to prepare a report whenever the deficit of a Member State exceeds the 3% of GDP reference value.
Is there a link to the economic and financial crisis?
The assessments are seen against the background of a sharp economic slowdown. A majority of the countries examined today (the Czech Republic, Denmark, Germany, the Netherlands, Poland, Spain, Sweden, Finland, France and the United Kingdom) have adopted fiscal stimulus measures in 2009 to cope with the economic crisis, in line with the Economic Recovery Plan proposed by the Commission and endorsed by EU leaders in December.
What is the impact on budgetary positions?
As a result of the global financial and economic crisis, EU public finances are under stress.
For a first group of eleven countries (Bulgaria, the Czech Republic, Denmark, Germany, Estonia, Hungary, the Netherlands, Poland, Sweden, Finland and the United Kingdom), the budgetary position remains within the limits of the Pact.
Another group of six countries (Ireland, Greece, Spain, France, Latvia and Malta) had a budget deficit of more than 3% in 2008. For these countries, the Commission reports analyse the reasons for the breach of the reference value, taking due regard of the economic background and other relevant factors.
Based on its assessment, the Commission has adopted recommendations for Council opinions on the programmes which will be discussed at the forthcoming ECOFIN meeting of 10 March.
The reports under the corrective arm of the Pact are addressed to the Economic and Financial Committee, which formulates own opinions within a fortnight. Taking into account its report and the opinion of the Committee, the Commission needs to decide whether to recommend to the Council the existence of excessive deficits (Articles 104.5 and 104.6) and a deadline for their correction (Article 104.7).
>> Press conference of Mr Almunia. 18 February 2009 at 11:37. Annual assessment of the stability and convergence programmes