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12 July 2011

ECOFIN Council conclusions on fiscal surveillance


The Council notes that according to the Commission services' spring 2011 forecast, the general government deficit both in the euro area and in the EU as a whole is planned to decline over the forecast horizon.

In the EU, the deficit should be reduced from 6.4 per cent in 2010 to 4.7 per cent in 2011 and, if budgetary plans outlined in the 2011 updates of the Stability and Convergence Programmes are fully implemented, further to 3.4 per cent in 2012 and 2.3 per cent in 2013, thus bringing the average deficit back below the 3 per cent of GDP threshold of the Stability and Growth Pact. All Member States with an excessive deficit plan are to correct it before or at the latest by the deadline set by the Council. This would contribute to halting and eventually reversing the increase in government debt as from 2012.

The Council welcomes that the fiscal strategies envisaged by Member States are broadly in line with the priorities for fiscal consolidation agreed by the Council in February 2011 and endorsed by the European Council in March on the basis of the Commission's Annual Growth Survey, as well as with the fiscal exit strategy agreed in October 2009. In particular, in most Member States fiscal consolidation has started in 2011 or earlier and the planned annual structural fiscal adjustment is, on average, significant. However, for a number of Member States, additional fiscal efforts are required in order to be in line with EDP recommendations and measures need to be specified further. Also, fiscal windfalls from higher than expected economic growth should be used for faster deficit reduction.

The Council stresses that the success of the fiscal exit strategy now crucially hinges upon the rigorous and full implementation by all Member States of the budgetary strategies, ensuring the fiscal targets are met and the commitments under the Stability and Growth Pact are respected. In particular, as outlined in the country-specific recommendations adopted under the European Semester, the Council calls on Member States to take and implement all the measures needed to ensure the achievement of their national fiscal targets, and to comply with the recommendations under the excessive deficit procedure, including the recommended average annual fiscal effort.

Full conclusions


© ECFIN


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