Important legal notice

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52007SC0137

Recommendation for a Council opinion in accordance with the third paragraph of Article 5 of Council Regulation (EC) No 1466/97 of 7 July 1997 on the updated stability programme of Luxembourg, 2006-2009  /* SEC/2007/0137 final */

	[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |Brussels, 7.2.2007SEC(2007) 137 finalRecommendation for aCOUNCIL OPINIONin accordance with the third paragraph of Article 5 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the updated stability programme of Luxembourg, 2006-2009(presented by the Commission)EXPLANATORY MEMORANDUM1. GENERAL BACKGROUNDThe Stability and Growth Pact, which entered into force on 1 July 1998, is based on the objective of sound government finances as a means of strengthening the conditions for price stability and for strong sustainable growth conducive to employment creation. The 2005 reform of the Pact acknowledged its usefulness in anchoring fiscal discipline but sought to strengthen its effectiveness and economic underpinnings as well as to safeguard the sustainability of the public finances in the long run.Council Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies[1], which is part of the Stability and Growth Pact, stipulates that Member States have to submit, to the Council and the Commission, stability or convergence programmes and annual updates thereof (Member States that have already adopted the single currency submit (updated) stability programmes and Member States that have not yet adopted it submit (updated) convergence programmes). The first stability programme of Luxembourg was submitted in February 1999. In accordance with the Regulation, the Council delivered an opinion on it on 15 March 1999 on the basis of a recommendation from the Commission and after having consulted the Economic and Financial Committee. In accordance with the same procedure, updated stability and convergence programmes are assessed by the Commission and examined by the Committee mentioned above, while the Council may examine them.2. BACKGROUND FOR THE ASSESSMENT OF THE UPDATED PROGRAMMEThe Commission has examined the most recent update of the stability programme of Luxembourg, submitted on 24 November 2006, and has adopted a recommendation for a Council opinion on it (see box for the main points covered by the assessment).In order to set the scene against which the budgetary strategy in the updated stability programme is assessed, the following paragraphs summarise:1.  the economic and budgetary performance over the last ten years2.  the most recent assessment of the country’s position under the preventive arm of the Stability and Growth Pact (summary of the Council opinion on the previous update of the stability programme), and3.  the Commission’s assessment of the October 2006 national reform programme.2.1. Recent economic and budgetary performanceThe macroeconomic performance of Luxembourg in the last 25 years has been impressive both in terms of output and employment growth. Even if Luxembourg experienced small deficits in recent years, the situation of public finance remains fundamentally sound, with a very low government debt and sizeable reserves held by the public sector. However, despite the strong job creation, the labour market situation is less favourable than appears at first sight. Unemployment, though still rather low, has been on the rise since 2002, with residents facing intense competition from non-residents. Moreover, the employment rate of older residents, although it rose in recent years, remains one of the lowest in the EU. The burden on public finances constituted by these unemployed and additional retirees has so far been easily sustained thanks to the buoyancy in revenues but it should nevertheless not be understated. Moreover, the large projected increase in ageing-related expenditure over the coming decades is a source of concern for the long-term sustainability of public finance.2.2. The assessment in the Council opinion on the previous programmeOn 14 February 2006, the Council adopted its opinion on the previous update of the stability programme, covering the period 2005-2008. The Council was of the opinion that " while the global strategy of deficit reduction through expenditure restraint presented in the programme is commendable, it would be appropriate for the Luxembourg authorities to strengthen the effort of budgetary adjustment in 2006 and identify and implement the necessary measures for 2007 and 2008, and to improve long-term sustainability, in particular by containing increases in public expenditure through reform in the pension system ".2.3. The Commission assessment of the October 2006 national reform programmeThe implementation report of the national reform programme of Luxembourg, provided in the context of the renewed Lisbon strategy for growth and jobs, was submitted on 27 October 2006. Luxembourg's national reform programme identifies as key challenges: a high quality education and learning system, an economy integrated in the European and international context, an attractive economic environment, a stable macro-economic framework and the respect of the principles of durable development.The Commission’s assessment of this programme (adopted as part of its December 2006 Annual Progress Report[2]) showed that Luxembourg is making very good progress on implementation of its National Reform Programme and of the actions agreed by the 2006 Spring European Council, but that there is still room for improvement regarding the weaknesses identified in 2005. The macro-economic measures adopted hold out the prospect of fiscal consolidation and lower inflation. A promising set of measures are now being implemented at the micro-economic level. Greater efforts are required, however, to implement a system to monitor and assess annual progress, and a number of measures need to be introduced, for instance to assist business start-ups and SMEs. Despite encouraging reforms on the employment front, no new initiative has been announced to raise the level of employment among older workers, and major reforms to improve the education system have yet to materialise.Against the background of progress made, Luxembourg was encouraged to focus on the areas of: strategies for further increasing the employment rate among older workers and reforming current early-retirement systems; further efforts to reduce drop-out rates and to remove the artificial barriers between different types of education; close monitoring of the impact on youth unemployment of the measures recently adopted for young; as well as greater support for competitive markets, for the transposition of EU directives and for SMEs.Box: Main points covered by the assessment As required by Article 5(1) (for stability programmes) and Article 9(1) (for convergence programmes) of Council Regulation (EC) No 1466/97, the assessment covers the following points: whether the economic assumptions on which the programme is based are plausible; the medium-term budgetary objective (MTO) presented by the Member State and whether the adjustment path towards it is appropriate; whether measures being taken and/or proposed to respect that adjustment path are sufficient to achieve the MTO over the cycle; when assessing the adjustment path towards the MTO, whether a higher adjustment effort is made in economic good times, whereas the effort may be more limited in economic bad times, and, for euro-area and ERM II Member States, whether the Member State pursues an annual improvement of the cyclically-adjusted balance, net of one-off and other temporary measures, of 0.5% of GDP as a benchmark to meet its MTO; when defining the adjustment path to the MTO (for Member States that have not yet reached it) or allowing a temporary deviation from the MTO (for Member States that have), the implementation of major structural reforms which have direct long-term cost-saving effects (including by raising potential growth) and therefore a verifiable impact on the long-term sustainability of public finances (subject to the condition that an appropriate safety margin with respect to the 3% of GDP reference value is preserved and that the budgetary position is expected to return to the MTO within the programme period), with special attention for pension reforms introducing a multi-pillar system that includes a mandatory, fully-funded pillar; whether the economic policies of the Member State are consistent with the broad economic policy guidelines. The plausibility of the programme’s macroeconomic assumptions is assessed by reference to the Commission services’ autumn 2006 forecast, using also the commonly agreed methodology for the estimation of potential output and cyclically-adjusted balances. The assessment of consistency with the broad economic policy guidelines is made against the broad economic policy guidelines in the area of public finances as included in the integrated guidelines for the period 2005-2008. The assessment also examines: the evolution of the debt ratio and the outlook for the long-term sustainability of the public finances, which should be given “sufficient attention in the surveillance of budgetary positions” according to the Council report of 20 March 2005 on “Improving the implementation of the Stability and Growth Pact”. A Commission Communication of 12 October 2006 sets out the approach to the assessment of long-term sustainability[3]; the degree of integration with the national reform programme, submitted by Member States in the context of the Lisbon strategy for growth and jobs. In its cover note of 7 June 2005 to the European Council on the broad economic policy guidelines for the period 2005-2008, the ECOFIN Council stated that the national reform programmes should be consistent with the stability and convergence programmes; compliance with the code of conduct[4], which inter alia prescribes a common structure and set of data tables for the stability and convergence programmes. |-  Recommendation for aCOUNCIL OPINIONin accordance with the third paragraph of Article 5 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the updated stability programme of Luxembourg, 2006-2009THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty establishing the European Community,Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies[5], and in particular Article 5(3) thereof,Having regard to the recommendation of the Commission,After consulting the Economic and Financial Committee,HAS DELIVERED THIS OPINION:4.  On [27 February 2007] the Council examined the updated stability programme of Luxembourg, which covers the period 2006 to 2009.5.  The macroeconomic scenario underlying the programme envisages that real GDP growth will decelerate from 5.5% in 2006 to 4.3% on average over the rest of the programme period. Assessed against currently available information, this scenario appears to be based on plausible growth assumptions. The programme’s projections for inflation also appear realistic.6.  For 2006, the general government deficit is estimated at 1.0% of GDP in the Commission services’ autumn 2006 forecast, against a target of 1.8% of GDP set in the previous update of the stability programme. This is partly explained by the downward revision of the 2005 deficit outcome, from 2.3% of GDP in the previous programme to 1.0% according to the most recent data. The 2006 deficit outturn may also be better than estimated in the new programme (1.5% of GDP) as tax revenues are likely to be underestimated.7.  The main goal of the programme's medium-term budgetary strategy is to regain a balanced position within the programme horizon. This is to be achieved through a progressive improvement of the general government balance from an estimated deficit of 1.5% of GDP to a small surplus in 2009 (0.1% of GDP). The reduction in the primary balance would be parallel to the decrease in the headline deficit. The adjustment relies on a reduction in the expenditure ratio amounting to 3.8 percentage points of GDP, which would more than compensate for a 2.1 point of GDP decrease in the revenue ratio. This strategy is similar to that described in the 2005 programme, which, against the background of a broadly similar macroeconomic outlook, projected the deficit to reach its peak in 2005 rather than 2006 and a broadly balanced position to be achieved in 2008 instead of 2009.8.  The structural balance (i.e. the cyclically-adjusted balance net of one-off and other temporary measures) calculated according to the commonly agreed methodology is planned to improve from a deficit of around 1¼% of GDP in 2006 to a surplus of about 1% at the end of the programme period. As in the previous update of the stability programme, the medium-term objective (MTO) for the budgetary position presented in the programme is a structural deficit of 0.8% of GDP. The programme aims to achieve the MTO by 2007, one year earlier than in the previous update. As the MTO is (slightly) more demanding than the minimum benchmark (estimated at a deficit of around 1% of GDP, achieving it should fulfil the aim of providing a safety margin against the occurrence of an excessive deficit. The MTO lies within the range indicated for euro-area and ERM II Member States in the Stability and Growth Pact and the code of conduct and adequately reflects the debt ratio and average potential output growth in the long term.9.  The budgetary outcomes could be better than projected in the programme. In particular, tax projections seem rather cautious, especially for 2007. Indeed, budgetary outcomes have very often been better than projected in Luxembourg in recent years, generally because of significantly higher-than-expected revenues.10.  In view of this risk assessment, the budgetary stance in the programme seems sufficient to ensure that the MTO is achieved by 2007, as envisaged in the programme. In addition, it seems to provide a sufficient safety margin against breaching the 3% of GDP deficit threshold with normal macroeconomic fluctuations from 2007 onwards. The pace of the adjustment towards the MTO implied by the programme is fully in line with the Stability and Growth Pact, which specifies that, for euro-area and ERM II Member States, the annual improvement in the structural balance should be 0.5% of GDP as a benchmark and that the adjustment should be higher in good economic times and could be lower in bad economic times. After the achievement of the MTO, the fiscal policy stance implied by the programme is also fully in line with the Pact.11.  Government gross debt is estimated to have reached 7.5% of GDP in 2006, well below the 60% of GDP Treaty reference value. The programme projects the debt ratio to rise slightly to 8.5% of GDP by the end of the programme period.12.  The long-term budgetary impact of ageing in Luxembourg is among the highest in the EU, influenced notably by a very considerable increase in pension expenditure, by 7½ percentage points of GDP, and in total age-related public spending, by 8¼ points, from 2004 to 2050 (compared to EU average increases of 2¼ and 3½ percentage points of GDP, respectively). The current level of gross debt is very low and considerable assets have been accumulated by the social security system. However, while the current size of these assets (estimated at around 25% of GDP) contributes significantly to public finance sustainability, it will not be sufficient to offset the impact on the debt ratio in the long term resulting from the sizeable increase in age-related expenditure. Therefore, while keeping a strong budgetary position will help to alleviate part of the cost of ageing, as recognised by the authorities, some changes to the pension scheme are necessary so as to contain the future increase in public expenditure and reduce the risks to the long-term sustainability of public finances. Overall, Luxembourg appears to be at medium risk with regard to the sustainability of its public finances.13.  The stability programme contains a qualitative assessment of the overall impact of the October 2006 implementation report of the national reform programme within the medium-term fiscal strategy. In addition, it provides some information on the direct budgetary costs or savings of the main reforms envisaged in the national reform programme and its budgetary projections seem to take into account the public finance implications of the actions outlined in the national reform programme. The measures in the area of public finances envisaged in the stability programme seem consistent with those foreseen in the national reform programme. In particular, the government's intention, confirmed by the programme, to keep public investment at a high level seems to reflect the identification as priority actions by the NRP of the increase in R&D, the encouragement of the sustainable use of resources and the improvement of the rail connections with neighbouring countries.14.  The budgetary strategy outlined in the programme is partly consistent with the broad economic policy guidelines included in the integrated guidelines for the period 2005-2008. In particular, no significant pension reforms have been undertaken to date.15.  As regards the data requirements specified in the code of conduct for stability and convergence programmes, the programme has some gaps in the required and optional data[6]. In addition, it deviates on some material points from the model structure specified in the code of conduct[7].The overall conclusion is that, in a context of strong growth prospects, the programme is making rapid progress towards the MTO, which should be achieved from 2007 onwards, and envisages a further narrowing of the deficit thereafter. However, the expenditure-curbing measures recently decided are only temporary (i.e. until 2009).Taking into account the above assessment and in view of the projected increase in age-related expenditure, Luxembourg is invited to improve the long-term sustainability of public finances by implementing structural reform measures (especially in the area of pensions).Comparison of key macroeconomic and budgetary projections2005 | 2006 | 2007 | 2008 | 2009 |Real GDP (% change) | SP Nov 2006 | 4.0 | 5.5 | 4.0 | 5.0 | 4.0 |COM Nov 2006 | 4.0 | 5.5 | 4.5 | 4.2 | n.a. |SP Nov 2005 | 4.0 | 4.4 | 4.9 | 4.9 | n.a. |HICP inflation (%) | SP Nov 2006 | 3.8 | 2.9 | 1.4 | 2.0 | 2.0 |COM Nov 2006 | 3.8 | 3.2 | 2.2 | 1.8 | n.a. |SP Nov 2005 | 3.7 | 2.6 | 2.0 | 1.8 | n.a. |Output gap (% of potential GDP) | SP Nov 20061 | -1.6 | -0.3 | -0.8 | -0.5 | -1.6 |COM Nov 20065 | -2.2 | -0.9 | -0.7 | -0.9 | n.a. |SP Nov 20051 | -1.7 | -1.3 | -0.7 | -0.6 | n.a. |General government balance (% of GDP) | SP Nov 2006 | -1.0 | -1.5 | -0.9 | -0.4 | 0.1 |COM Nov 2006 | -1.0 | -1.0 | -0.5 | -0.3 | n.a. |SP Nov 2005 | -2.3 | -1.8 | -1.0 | -0.2 | n.a. |Primary balance (% of GDP) | SP Nov 2006 | -0.8 | -1.3 | -0.8 | -0.2 | 0.3 |COM Nov 2006 | -0.8 | -0.8 | -0.3 | -0.1 | n.a. |SP Nov 2005 | -2.1 | -1.7 | -0.7 | 0.1 | n.a. |Cyclically-adjusted balance (% of GDP) | SP Nov 20061 | -0.2 | -1.3 | -0.5 | -0.1 | 0.9 |COM Nov 2006 | 0.0 | -1.1 | -0.2 | 0.1 | n.a. |SP Nov 20051 | -1.5 | -1.2 | -0.6 | 0.1 | n.a. |Structural balance2 (% of GDP) | SP Nov 20063 | -0.2 | -1.3 | -0.5 | -0.1 | 0.9 |COM Nov 20064 | 0.0 | -1.1 | -0.2 | 0.1 | n.a. |SP Nov 2005 | -1.5 | -1.2 | -0.6 | 0.1 | n.a. |Government gross debt (% of GDP) | SP Nov 2006 | 6.1 | 7.5 | 8.2 | 8.5 | 8.5 |COM Nov 2006 | 6.0 | 7.4 | 7.3 | 7.1 | n.a. |SP Nov 2005 | 6.4 | 9.6 | 9.9 | 10.2 | n.a. |Notes: 1 Commission services calculations on the basis of the information in the programme. 2 Cyclically-adjusted balance (as in the previous rows) excluding one-off and other temporary measures. 3 There are no one-off and other temporary measures in the programme. 4 There are no one-off and other temporary measures in the Commission services’ autumn 2006 forecast. 5 Based on estimated potential growth of 4.1%, 4.1%, 4.4% and 4.7% respectively in the period 2005-2008. Source: Stability programme (SP); Commission services’ autumn 2006 economic forecasts (COM); Commission services’ calculations |[1] OJ L 209, 2.8.1997, p. 1. Regulation as amended by Regulation (EC) No 1055/2005 (OJ L 174, 7.7.2005, p. 1). All the documents referred to in this text can be found at the following website:http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htm[2] Communication from the Commission to the Spring European Council, “Implementing the renewed Lisbon strategy for growth and jobs - A year of delivery” - COM(2006) 816, 12.12.2006.[3] Communication from the Commission to the Council and the European Parliament, “The long-term sustainability of public finances in the EU” - COM(2006) 574, 12.10.2006 - and European Commission, Directorate-General for Economic and Financial Affairs (2006), “The long-term sustainability of public finances in the European Union”, European Economy No 4/2006.[4] “Specifications on the implementation of the Stability and Growth Pact and guidelines on the format and content of stability and convergence programmes”, endorsed by the ECOFIN Council of 11 October 2005.[5] OJ L 209, 2.8.1997, p. 1. Regulation as amended by Regulation (EC) No 1055/2005 (OJ L 174, 7.7.2005, p. 1). The documents referred to in this text can be found at the following website:http://europa.eu.int/comm/economy_finance/about/activities/sgp/main_en.htm[6] In particular, the data on sectoral balances are missing (except for the general government).[7] The section on the institutional features of public finance is missing.


title: Recommendation for a Council recommendation to Portugal with a view to bringing an end to the situation of an excessive government deficit Application of Article 104(7) of the Treaty

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		52011SC0817

			Recommendation for a COUNCIL RECOMMENDATION on the National Reform Programme 2011 of Spainand delivering a Council opinionon the updated Stability Programme of Spain, 2011-2014 /* SEC/2011/0817 final */

			   	Recommendation for a
COUNCIL RECOMMENDATION
on the National Reform Programme 2011 of
Spain
and delivering a Council opinion
on the updated Stability Programme of Spain, 2011-2014
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning
of the European Union, and in particular Article 121(2) and 148(4) thereof,
Having regard to Council Regulation (EC) No
1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic policies[1],
and in particular Article 5(3) thereof,
Having regard to the recommendation of the European
Commission[2],
Having regard to the conclusions of the
European Council,
Having regard to the opinion of the
Employment Committee,
After consulting the Economic and Financial
Committee,
Whereas:
(1)
On 26 March 2010, the European Council agreed to
the European Commission's proposal to launch a new strategy for jobs and
growth, Europe 2020, based on enhanced coordination of economic policies, which
will focus on the key areas where action is needed to boost Europe’s potential
for sustainable growth and competitiveness.
(2)
On 13 July 2010, the Council adopted a
recommendation on the broad guidelines for the economic policies of the Member
States and the Union (2010 to 2014) and on 21 October 2010, adopted a decision
on guidelines for the employment policies of the Member States[3],
which together form the “integrated guidelines”. Member States were invited to
take the integrated guidelines into account in their national economic and
employment policies.
(3)
On 12 January 2011, the Commission adopted the
first Annual Growth Survey, marking the start of a new cycle of economic
governance in the EU and the first European semester of ex-ante and integrated
policy coordination, which is anchored in the Europe 2020 strategy.
(4)
On 25 March 2011, the European Council endorsed
the priorities for fiscal consolidation and structural reform (in line with the
Council’s conclusions of 15 February and 7 March 2011 and further to the
Commission’s Annual Growth Survey). It underscored the need to give priority to
restoring sound budgets and fiscal sustainability, reducing unemployment
through labour market reforms and making new efforts to enhance growth. It
requested Member States to translate these priorities into concrete measures to
be included in their Stability or Convergence Programmes and National Reform
Programmes.
(5)
On 25 March 2011, the European Council also
invited the Member States participating in the Euro Plus Pact to present their
commitments in time to be included in their Stability or Convergence Programmes
and their National Reform Programmes.
(6)
On 29 April 2011, Spain submitted its 2011
Stability Programme update covering the period 2011-2014 and its 2011 National
Reform Programme. In order to take account of the interlinkages, the two
programmes have been assessed at the same time.
(7)
The Spanish economy was severely hit by the
crisis and went through a sharp adjustment in 2008-2009. Real GDP fell by 4.3%
between the beginning of 2008 and the end of 2010, and employment declined by
over 10%. As a consequence, the unemployment rate rose to 20.1% at the end of
2010, the highest in the EU. The young (41.6% unemployment rate) and the less
educated workers (26.4% unemployment rate) bore much of the brunt of the
Spanish recession. Sovereign debt yields increased and the banking system, in
particular savings banks, came under pressure with the burst of the housing
bubble and the sharp contraction of the construction sector. The process of
absorbing large macro-economic imbalances built up during the boom period will
continue for some time. In response to these challenges, the Spanish Government
has embarked on a reform agenda covering fiscal consolidation, savings bank
restructuring and labour and product market reforms.
(8)
Based on the assessment of the updated Stability
Programme pursuant to Council Regulation (EC) No 1466/97, the Council is of the
opinion that the macroeconomic scenario underpinning the budgetary projections
in the Stability Programme is too favourable in 2011 and 2012. The Programme
plans to bring the budget deficit below the 3% reference value by 2013, in line
with the Council recommendations of April 2009, and reduce the deficit further
to 2.1% of GDP in 2014. The programme does not foresee the achievement of the
MTO, which remains a balanced budget, in the programme horizon. This adjustment
path is broadly appropriate. The annual average improvement of the structural
balance is 1.5% of GDP on average for 2010-13, in line with the Council
recommendation, and an additional 0.3% of GDP in 2014. The debt-to-GDP ratio is
projected to rise from 60.1% of GDP in 2010 to around 69% at the end of the
programme period. There are downside risks to the consolidation path related to
the underlying macroeconomic assumptions and to the respect of budgetary
targets at the regional level. Regions account for a large share of total
public expenditure and many exceeded their fiscal objectives in 2010. However,
the Spanish government has committed to take additional measures, if budgetary
slippages emerge.
(9)
Achieving the foreseen fiscal consolidation in
2011 and 2012 requires strict application of the deficit and debt control
mechanisms that have been put in place for regional governments. Achieving the
budgetary targets in the event that macroeconomic and budgetary developments
turn out worse than expected in 2011 and 2012, will require additional measures
that the Government has committed to take. For 2013 only a few measures have
been identified to underpin the budgetary targets.
(10)
The medium-term budgetary framework in Spain has
been instrumental in promoting multi-annual fiscal planning and overall shows a
good track record. However, the crisis has put this framework to the test and
showed the need to strengthen further fiscal stability and the preventive
aspect of fiscal policy. This would be enhanced by introducing a spending rule
based on medium-term nominal GDP growth. The rule, put forward by the Spanish
authorities in the Stability Programme, would automatically bind the central
government and local governments. The government also plans to seek consensus
within the Council for Fiscal and Financial Policy on applying the rule to the
Autonomous Communities.
(11)
The likely long-term impact of ageing on the
Spanish public budget is higher than the EU average. This is primarily because
of the substantial increase in pension expenditure as a share of GDP that is
projected for the coming decades. In the long run ageing will lead to a significant
increase in the ratio of retirees per worker. In the absence of reform,
expenditure on pensions is estimated to increase at a rate well above the EU
average and put at risk the sustainability of public finances. The government
proposal for a pension reform, agreed with social partners, will help to
improve fiscal sustainability and raise incentives for labour market
participation. However, the reform still needs to be approved by Parliament and
may still be subject to changes.
(12)
Spain has taken important steps to strengthen
its banking system, notably by providing sizeable public support and taking
measures to restructure savings banks, reinforce banks' solvency, and improve
transparency of their balance sheets. However, the problems created by the role
of local authorities in the governance of savings banks are not yet fully
solved. The form of savings banks' consolidation via 'cold mergers' has given
rise to some uncertainty regarding the effective reorganisation and downsizing
of the banks. The Government has undertaken to finalise the restructuring by
the end of September 2011.
(13)
The ongoing labour market reform in Spain needs
to be complemented by an overhaul of the current unwieldy collective bargaining
system. The predominance of provincial and industry agreements leaves little
room for negotiations at firm level. The automatic extension of collective
agreements, the validity of non-renewed contracts and the use of ex-post
inflation indexation clauses contribute to wage-inertia, preventing the wage
flexibility needed to speed up economic adjustment and restore competitiveness.
The Government has requested social partners to agree on a reform of the
collective wage bargaining system during Spring 2011 and has undertaken to
legislate subsequently.
(14)
Against the background of very high
unemployment, Spain launched a reform of its labour market with the law of
September 2010. The law aims to reduce labour market duality and youth
unemployment, increase the employability of vulnerable groups and increase
flexibility at company level. To this end, reform of the active labour market
policies was adopted in February 2011 that also included measures to strengthen
the advisory and guiding role of employment services and their coordination at
national and regional levels. At this stage it is too early to assess whether
the reform is sufficient to reduce segmentation and reduce youth and long-term
unemployment since some measures are not operational yet. The Government has
committed to further steps by October 2011.
(15)
Spain experienced a strong increase in unit
labour costs since the late 1990s, implying a loss of price and cost
competitiveness. Higher wage growth coupled with lower productivity growth than
in the euro area contributed to persistently higher inflation in Spain. Finding
room to reduce in a budget-neutral way the relatively high level of social
contributions to lower non-wage labour costs, would help boost competitiveness.
For instance, energy taxes, especially fuel taxes, remain relatively low in
Spain and could be a way of offsetting revenue.
(16)
The high level of early school leaving in Spain
(31.2% in 2009) is particularly worrying, as it undermines the size of the
skilled work force, affects the job prospects of the concerned individuals and
reduces potential growth. The Law on Sustainable Economy, adopted on 15
February 2011, includes measures aiming at increasing the quality and quantity
of human capital through education and vocational training. However, the
effectiveness of the new measures to combat early school leaving and to improve
vocational training is uncertain and implementation at all levels of government
may prove difficult.
(17)
Spain has made progress in improving the
conditions for competition in product and service markets, addressing one of
the causes of slow productivity growth. Although transposition of the Services
Directive into law is well advanced in Spain, further opening up of
professional services is needed. The Law on Sustainable Economy includes a wide
array of measures to improve the business environment, strengthen competition
and promote environmental sustainability. However, implementation may prove
difficult to carry through at all levels of government. Specifically, there is
a need to prevent overlaps between layers of the administration, multi-level
legislative gold-plating, and substantially heterogeneous legislation across
regions.
(18)
Spain has made a number of commitments under the
Euro Plus Pact[4]. On the fiscal side,
Spain commits to establishing an expenditure rule to enhance fiscal stability
and thus sustainability of public finances. To reinforce financial stability,
Spain committed to complete before 30 September the restructuring process of
the financial sector. Employment measures focus on implementing acts on active
labour market policies and provisions in the field of vocational training, as
well as on addressing informal employment. The competitiveness measures focus
on reforming the collective bargaining system, regulated professions, setting
up an Advisory Committee on Competitiveness and a reform of bankruptcy law. The
above commitments refer to all four areas of the Pact. They represent a
continuity of the ongoing reform agenda, adding a firm timeframe for the
implementation of certain reforms and ensuring full implementation of reforms
that have already been carried out. These commitments have been assessed and
taken into account in the recommendations.
(19)
The Commission has assessed the Stability
Programme and National Reform Programme, including the Euro Plus Pact commitments[5].
It has taken into account not only their relevance for sustainable fiscal and
socio-economic policy in Spain but also their respect of EU rules and guidance,
given the need to reinforce the overall economic governance of the European
Union by providing EU level input into future national decisions. In this
light, the Commission considers that the Spanish government has established
fiscal consolidation plans consistent with the required targets, but that some
downside risks remain. Public expenditure growth should be kept below the rate
of medium-term GDP growth and the pension reform needs to be adopted. Further
steps in 2011-12 should focus on ensuring the stability of the financial system
(through the finalisation of the restructuring and consolidation of the savings
banks) and the strengthening of domestic sources for growth, by addressing the
current surge in unemployment in particular through the reform of collective
bargaining and continued implementation of the ongoing reforms in the labour
market, with a close monitoring and evaluation of their effectiveness. The
services sector, trades and professions should be opened up to greater
competition, and the administrative burden for enterprises should be reduced.
(20)
In light of this assessment, also taking into
account the Council Recommendation under Article 126(7) Treaty on the
Functioning of the European Union of 2 June 2010, the Council has examined the
2011 update of the Stability Programme of Spain and its opinion[6]
is reflected in particular in its recommendation under (1) set out below.
Taking into account the European Council conclusions of 25 March 2011, the
Council has examined the National Reform Programme of Spain,
HEREBY RECOMMENDS that Spain should
take action within the period 2011-2012 to:
(1)
Implement the budgetary strategy in 2011 and
2012, ensuring the achievement of deficit targets at all levels of government,
including by strictly applying the existing deficit and debt control mechanisms
for regional governments; adopt further measures in case budgetary and economic
developments do not turn out as expected; take any opportunity including from
better economic conditions to accelerate the deficit reduction; set out
concrete measures to fully underpin the targets for 2013 and 2014. Keep public
expenditure growth below the rate of medium-term GDP growth, by introducing an
expenditure rule at all levels of government in the Budget Stability Law, as
envisaged.
(2)
Adopt the proposed pension
reform to extend the retirement age and increase the
number of working years for the calculation of pensions as planned; regularly
review pension parameters in line with changes to life expectancy, as planned,
and develop further measures to raise the effective retirement age, including
lifelong learning for older workers.
(3)
Reinforce the ongoing restructuring of the
savings banks sector by addressing remaining weaknesses in their governance
structure.
(4)
Explore the scope to reduce the level of social
security contributions in order to lower non-wage labour costs in a budget-neutral
way, for example by changing the structure and rate of VAT and energy taxation.
Adopt and implement, following consultation with social
partners in accordance to national practice, a reform of the collective wage
bargaining process and the wage indexation system to ensure that wage growth
better reflects productivity developments as well as local and firm level
conditions.
(5)
Assess by the end of 2011 the impacts of the
labour market reforms of September 2010 and of the reform of active labour market
policies of February 2011, accompanied, if necessary, by proposals for further
reforms to reduce labour market segmentation, and to improve employment
opportunities for young people; ensure a close
monitoring of the effectiveness of the measures set out in the National Reform
Programme to reduce early school leaving, including through prevention
policies, and facilitate the transition to vocational education and training.
(6)
Further open up professional services and enact
the planned legislation in order to redesign the regulatory framework and
eliminate current restrictions to competition, efficiency and innovation;
implement the Law on Sustainable Economy, notably measures aimed at improving
the business environment and enhancing competition in the product and service
markets, at all levels of government; improve coordination between regional and
national administrations to reduce the administrative burden for enterprises.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 209, 2.8.1997, p. 1.
[2]               OJ C , , p. .
[3]               Maintained for 2011 by Council Decision 2011/308/EU
of 19 May 2011.
[4]               More details on the commitments under the Euro Plus
Pact can be found in SEC(2011) 718.
[5]               SEC(2011) 718.
[6]               Foreseen in Article 5(3) of Council Regulation (EC)
No 1466/97.


title: Recommendation of the European Central Bank of 9 June 2011 to the Council of the European Union on the external auditors of the Oesterreichische Nationalbank (ECB/2011/7)

text:
               15.6.2011

               EN

               Official Journal of the European Union

               C 174/6

         RECOMMENDATION OF THE EUROPEAN CENTRAL BANK
   of 9 June 2011
   to the Council of the European Union on the external auditors of the Oesterreichische Nationalbank
   (ECB/2011/7)
   2011/C 174/04
   THE GOVERNING COUNCIL OF THE EUROPEAN CENTRAL BANK,
   Having regard to the Statute of the European System of Central Banks and of the European Central Bank, and in particular Article 27.1 thereof,
   Whereas:

               (1)

               The accounts of the European Central Bank (ECB) and national central banks are audited by independent external auditors recommended by the ECB’s Governing Council and approved by the Council of the European Union.

               (2)

               Pursuant to Article 37(1) of the Federal Law on the Oesterreichische Nationalbank, the General Meeting of the Oesterreichische Nationalbank elects two external auditors and two alternate external auditors each year. The alternate external auditors will be mandated only in the event that the external auditors are not able to perform the audit.

               (3)

               The mandate of both the external auditors and the alternate external auditors of the Oesterreichische Nationalbank ended following the audit for the financial year 2010. It is therefore necessary to appoint external auditors from the financial year 2011.

               (4)

               The Oesterreichische Nationalbank has selected for the financial year 2011 TPA Horwath Wirtschaftsprüfung GmbH and Ernst & Young Wirtschaftsprüfungsgesellschaft m.b.H. as its new joint external auditors, as well as KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft and Deloitte Audit Wirtschaftsprüfungs GmbH as its new joint alternate external auditors.

               (5)

               The mandate of the external auditors may be renewed on an annual basis, not exceeding a total term of five years and the mandate of the alternate external auditors may be renewed only once,

         HAS ADOPTED THIS RECOMMENDATION:

               1.

               It is recommended that TPA Horwath Wirtschaftsprüfung GmbH and Ernst & Young Wirtschaftsprüfungsgesellschaft m.b.H. should be appointed jointly as the external auditors of the Oesterreichische Nationalbank for the financial year 2011.

               2.

               It is recommended that KPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft and Deloitte Audit Wirtschaftsprüfungs GmbH should be appointed jointly as the alternate external auditors of the Oesterreichische Nationalbank for the financial year 2011.

               3.

               The mandate of the external auditors may be renewed on an annual basis, not exceeding a total term of five years, ending with the financial year 2015 at the latest. The mandate of the alternate external auditors may be renewed only once ending with the financial year 2012.

      Done at Frankfurt am Main, 9 June 2011.

            The President of the ECB

         Jean-Claude TRICHET


Avis juridique important

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31991K3909

Commission Recommendation No 3909/91/ECSC of 18 December 1991 on prior Community surveillance of imports of certain iron and steel products covered by the ECSC Treaty and originating in non-member countries

Official Journal L 370 , 31/12/1991 P. 0032 - 0034

COMMISSION RECOMMENDATION N° 3909/91/ECSCof 18 December  1991on prior Community surveillance of imports of certain iron and steel products covered by the  ECSC Treaty and originating in non-member countriesTHE COMMISSION OF THE EUROPEAN  COMMUNITIES, Having regard to the Treaty establishing the European Coal and Steel Community, and in particular  Article 74 thereof, Whereas by Recommendation N° 556/91/ECSC (1), the Commission made imports into the Community of  certain iron and steel products covered by the Treaty establishing the European Coal and Steel  Community subject to Community surveillance; Whereas the reasons which originally led the Commission to introduce this measure continue to apply  and the said surveillance system should therefore be continued so as to provide more detailed  information on foreseeable imports and the terms and conditions of such imports; Whereas some Member States still have quantitative restrictions on iron and steel products from  certain third countries, and import surveillance is therefore required; Whereas the surveillance should, however, be simplified and made more effective, MAKES THE FOLLOWING RECOMMENDATION: Article 11.  The release for free circulation in the Community of iron and  steel products covered by the ECSC Treaty, listed in Annex I and originating in non-member  countries other than the countries of the European Free Trade Association (EFTA) shall be subject  to the issue of an import document. 2.  The import document shall be issued or endorsed by the Member States, free of charge and for  any quantities requested, upon receipt of the application and in any case within not more than 10  working days from the submission of the completed application. 3.  Paragraph 2 shall apply without prejudice to the applicability of quantitative limits based on  existing restrictions imposed by the Member States on certain iron and steel products in respect of  certain non-member countries. 4.  The period of validity of the import document is hereby fixed at three months, without  prejudice to possible changes in the import arrangements in force. 5.  Without prejudice to paragraph 3, unused or partly-used import documents may be renewed in  accordance with the procedure laid down by the competent authority. Article 21.  The importer's application must state: (a)  the name, address, occupation, telephone number, telex number and fax number of the importer; (b)the exporter's name and address; (c)the description of the goods and the CN code(s); (d)the country of origin; (e)the country of consignment; (f)the net weight, by EEC nomenclature heading; (g)the currency and value invoiced (cif or daf) by EEC nomenclature heading; (h)whether the products concerned are seconds or of substandard quality (2); (i)the proposed date(s) and place(s) of customs clearance. 2.  The importer shall certify that his application for an import document is accurate and shall  submit a copy either of the purchase contract(s) or of the vendor's order confirmation(s);  confirmations shall be accompanied by the pro forma invoice. 3.  The importer shall state whether his application is a repeat of a previous application  concerning the same delivery. 4.  Without prejudice to Article 1 (3), paragraph 1 shall not prevent release for free circulation  in cases where the unit price for the transaction exceeds that indicated in the import document or  the quantity of products presented on import exceeds that stipulated in the import document by less  than 5 % in aggregate. Article 31.  Within the first 10 days of each month, the Member States shall notify the  Commission of the tonnage and values (calculated on the basis of the cif or daf prices) for which  import documents were issued during the preceding month, giving the particulars entered in the  importers' applications under Article 2 (1) (a), (c) to (h). 2.  Within the first 10 days of each month, Member States shall notify the Commission of the  tonnage and the values for which import documents expired during the preceding month unused or only  partly used. 3.  The Member States shall give notification of any anomalies or cases of fraud which they  discover. Article 4This recommendation is addressed to the Member States. Article 5This recommendation shall be applicable from 1 January 1992. It shall apply until 31  December 1992. Done at Brussels, 18 December 1991. For the CommissionFrans ANDRIESSENVice-President(1) OJ N° L 62, 8. 3. 1991,  p. 18. (2) Under the criteria given in OJ N° C 180, 11. 7. 1991, p. 4.


Avis juridique important

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31977H0712

77/712/EEC: Council recommendation of 25 October 1977 on the regulating of space heating, the production of domestic hot water and the metering of heat in new buildings

Official Journal L 295 , 18/11/1977 P. 0001 - 0002 Spanish special edition: Chapter 12 Volume 3 P. 0034  Portuguese special edition Chapter 12 Volume 3 P. 0034

COUNCIL RECOMMENDATION  of 25 October 1977  on the regulating of space heating, the production of domestic hot water and the metering of heat in new buildings  (77/712/EEC)  THE COUNCIL OF THE EUROPEAN COMMUNITIES,  Having regard to the Treaty establishing the European Economic Community,  Having regard to the draft from the Commission,  Whereas, in its resolution of 17 September 1974 concerning a new energy-policy strategy for the Community (1), the Council approved the objective of reduction of the rate of growth of internal consumption by measures for using energy rationally and economically without jeopardizing social and economic growth objectives;  Whereas improvements in the rational use of energy are generally beneficial to the environment;  Whereas, in its resolution of 17 December 1974 on a Community action programme on the rational utilization of energy (2), the Council noted that, in its communication to the Council entitled "Rational Utilization of Energy", the Commission had drawn up a Community action programme in this field;  Whereas the Council recommendation of 4 May 1976 (3) related to the heating systems of existing buildings ; whereas it is advisable to obtain energy savings as soon as possible for the heating systems of new buildings;  Whereas this objective can be achieved in buildings with collective heating systems only if the occupants are able to regulate their own energy consumption;  Whereas collective systems for space heating and production of domestic hot water of new buildings with several occupants should be fitted with the means for apportioning the heating costs among the various occupants on the basis of the amount of heat supplied;  Whereas the measures recommended are such as to produce sufficiently large savings in energy while ensuring that the required investments are economically worthwhile,  HEREBY RECOMMENDS TO THE MEMBER STATES:  that they adopt any laws, regulations or administrative measures necessary to ensure that:  (1)OJ No C 153, 9.7.1975, p. 1. (2)OJ No C 153, 9.7.1975, p. 5. (3)OJ No L 140, 28.5.1976, p. 12.


Avis juridique important

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31983K1230

Commission Recommendation No 1230/83/ECSC of 18 May 1983 imposing a definitive anti-dumping duty on imports of certain sheets and plates, of iron or steel, originating in Brazil

Official Journal L 131 , 20/05/1983 P. 0013 - 0014 Spanish special edition: Chapter 11 Volume 28 P. 0138  Portuguese special edition Chapter 11 Volume 28 P. 0141

*****COMMISSION  RECOMMENDATION No 1230/83/ECSC  of 18 May 1983  imposing a definitive anti-dumping duty on imports of certain sheets and plates, of iron or steel, originating in Brazil  THE COMMISSION OF THE EUROPEAN  COMMUNITIES,  Having regard to the Treaty establishing the European Coal and Steel Community,  Having regard to Commission recommendation No 3018/79/ECSC of 21 December 1979 on protection against dumped or subsidized imports from countries not members of the European Coal and Steel Community (1), as last amended by recommendation No 3025/82/ECSC (2), and in particular Article 12 thereof,  After consultations within the Advisory Committee as provided for under the above recommendation,  Whereas in May 1982 the Commission received a complaint, lodged by the European Confederation of Iron and Steel Industries (Eurofer) on behalf of almost all Community producers of sheets and plates, of iron or steel, not further worked than hot-rolled, of a thickness of three millimetres or more;  Whereas, since the complaint provided sufficient evidence of dumping in respect of like products originating in Brazil and of material injury resulting therefrom, the Commission accordingly announced, by a notice published in the Official Journal of the European Communities (3), the initiation of a proceeding concerning imports of certain sheets and plates, of iron or steel, originating in Brazil and commenced an investigation of the matter at Community level;  Whereas, since the Brazilian authorities objected to a verification of normal value at the premises of the Brazilian exporters concerned, the Commission, for its preliminary determination of dumping, compared the Brazilian export prices of the products under consideration, adjusted to a cif-Community-frontier level, duty-paid, with the effective prices (basic + extras) published by it for products of like quality and dimensions during the period covered by the investigation; whereas, on this basis, a weighted-average dumping margin of 24,3 % was established; whereas, in addition, the Commission carried out an injury investigation and concluded that the dumped imports originating in Brazil were causing material injury to a Community industry; whereas, under these circumstances and since the interests of the Community called for immediate intervention, the Commission, by recommendation No 376/83/ECSC (4), imposed a provisional anti-dumping duty on imports of the products under consideration originating in Brazil;  Whereas a time limit was set within which the parties concerned could, following the imposition of the provisional duty, make their views known and apply to be heard orally by the Commission; whereas none of the parties concerned availed itself of this opportunity;  Whereas, in the course of the subsequent examination, no new evidence concerning dumping or injury has been made available to the Commission which would call into question the conclusions reached in the preliminary investigation;  Whereas, in these circumstances, the Commission finally determines that the dumped imports originating in Brazil have been causing material injury to a Community industry and that further injury would have been caused if provisional action had not been taken;  Whereas, in the difficult situation experienced by the Community steel industry, the interests of the Community call for the imposition of a definitive anti-dumping duty, the rate of which should be equal to the rate of the provisional duty, and for the definitive collection of the amounts secured by way of provisional duty,  MAKES THE FOLLOWING RECOMMENDATION:  Article 1  1. A definitive anti-dumping duty is hereby imposed on sheets and plates, of iron or steel, not further worked than hot-rolled, of a thickness of three millimetres or more, falling within subheading 73.13 B I ex a) of the Common Customs Tariff (NIMEXE codes 73.13-17, 19, 21 and 23) and originating in Brazil.  2. The amount of the duty shall be 72,20 ECU per 1 000 kilograms net.  3. The duty shall, however, be reduced to the extent to which the importer establishes, to the satisfaction of the competent national authorities, that the quality of these products is inferior to the lowest quality described in the last publication of basic prices by the Commission.  4. The provisions in force concerning customs duties shall apply for the application of the duty.  Article 2  The amounts secured by way of provisional anti-dumping duty pursuant to recommendation No 376/83/ECSC shall be definitively collected.  Article 3  This recommendation shall enter into force on the day following its publication in the Official Journal of the European Communities.  Done at Brussels, 18 May 1983.  For the Commission  Edgar PISANI  Member of the Commission  (1) OJ No L 339, 31. 12. 1979, p. 15.  (2) OJ No L 317, 13. 11. 1982, p. 17.  (3) OJ No C 197, 31. 7. 1982, p. 3.  (4) OJ No L 45, 17. 2. 1983, p. 14.


Avis juridique important

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31998H0218

98/218/EC: Council Recommendation of 9 March 1998 concerning the discharge to be given to the Commission in respect of the implementation of the operations of the European Development Fund (1989) (Seventh EDF) for the financial year 1996

Official Journal L 082 , 19/03/1998 P. 0043 - 0043

COUNCIL RECOMMENDATION of 9 March 1998 concerning the discharge to be given to the Commission in respect of the implementation of the operations of the European Development Fund (1989) (Seventh EDF) for the financial year 1996 (98/218/EC)THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty establishing the European Community, and in particular Article 206 thereof,Having regard to the Fourth ACP-EEC Convention, signed at Lomé on 15 December 1989,Having regard to Council Decision 91/482/EEC of 25 July 1991 on the association of the overseas countries and territories with the European Economic Community (1),Having regard to the Internal Agreement on the financing and administration of Community aid (2), signed in Brussels on 16 July 1990, and in particular Article 33(3) thereof,Having regard to the Financial Regulation of 29 July 1991 applicable to the Seventh European Development Fund (3), and in particular Articles 69 to 77 thereof,Having examined the revenue and expenditure account and the balance sheet relating to the operations of the European Development Fund (1989) (Seventh EDF) as at 31 December 1996 and the Court of Auditors' report relating to the financial year 1996 together with the Commission's replies (4),Whereas, pursuant to Article 33(3) of the Internal Agreement, the discharge for the management of the European Development Fund (1989) (Seventh EDF) must be given to the Commission by the European Parliament on a recommendation from the Council;Whereas the overall implementation by the Commission of the operations of the European Development Fund (1989) (Seventh EDF) during the financial year 1996 has been satisfactory,HEREBY RECOMMENDS that the European Parliament give the Commission a discharge in respect of the implementation of the operations of the European Development Fund (1989) (Seventh EDF) for the financial year 1996.Done at Brussels, 9 March 1998.For the CouncilThe PresidentG. BROWN(1) OJ L 263, 19. 9. 1991, p. 1.(2) OJ L 229, 17. 8. 1991, p. 288.(3) OJ L 266, 21. 9. 1991, p. 1.(4) OJ C 348, 18. 11. 1997, Volume I.


				|

		52012DC0317

			Recommendation for a COUNCIL RECOMMENDATION on Hungary’s 2012 national reform programme and delivering a Council opinion on Hungary’s convergence programme for 2012-2015 /* COM/2012/0317 final */

			   	Recommendation for a
COUNCIL RECOMMENDATION
on Hungary’s 2012 national reform
programme
and delivering a Council opinion on Hungary’s convergence programme for
2012-2015
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Articles 121(2) and 148(4)
thereof,
Having regard to Council Regulation (EC) No
1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic policies[1], and in particular Article 5(2)
thereof,
Having regard to Regulation (EU) No
1176/2011 of the European Parliament and of the Council of 16 November 2011 on
the prevention and correction of macroeconomic imbalances[2], and in particular Article 6(1)
thereof,
Having regard to the recommendation of the
European Commission[3],
Having regard to the resolutions of the
European Parliament,[4]
Having regard to the conclusions of the
European Council,
Having regard to the opinion of the
Employment Committee,
After consulting the Economic and Financial
Committee,
Whereas:
(1)       On 26 March 2010, the
European Council agreed to the European Commission’s proposal to launch a new
strategy for jobs and growth, Europe 2020, based on enhanced coordination of
economic policies, which will focus on the key areas where action is needed to
boost Europe’s potential for sustainable growth and competitiveness.
(2)       On 13 July 2010, the
Council adopted a recommendation on the broad guidelines for the economic
policies of the Member States and the Union (2010 to 2014) and, on 21 October
2010, adopted a decision on guidelines for the employment policies of the
Member States[5],
which together form the ‘integrated guidelines’. Member States were invited to
take the integrated guidelines into account in their national economic and
employment policies.
(3)       On 12 July 2011, the
Council adopted a recommendation on Hungary’s national reform programme for 2011
and delivered its opinion on Hungary’s updated convergence programme for
2011-2014.
(4)       On 23 November 2011, the
Commission adopted the second Annual Growth Survey, marking the start of the second
European semester of ex-ante and integrated policy coordination, which is
anchored in the Europe 2020 strategy. On 14 February 2012, the Commission, on
the basis of Regulation (EU) 1176/2011, adopted the Alert Mechanism Report[6], in which it identified Hungary
as one of the Member States for which an in-depth review would be carried out.
(5)       On 2 March 2012, the
European Council endorsed the priorities for ensuring financial stability,
fiscal consolidation and action to foster growth. It underscored the need to pursue
differentiated, growth-friendly fiscal consolidation, to restore normal lending
conditions to the economy, to promote growth and competitiveness, to tackle
unemployment and the social consequences of the crisis, and to modernise public
administration.
(6)       On 29 February 2012, the
European Parliament and Hungary exchanged views under Article 2a of Council
Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the
surveillance of budgetary positions and the surveillance and coordination of
economic policies.
(7)       On
2 March 2012, the European Council also invited Member States participating in
the Euro Plus Pact to present their commitments in time for inclusion in their stability
or convergence programmes and their national reform programmes.
(8)       On 23 April 2012, Hungary
submitted its convergence programme covering the period 2012-2015 and its 2012 national
reform programme. In order to take account of their interlinkages, the two
programmes have been assessed at the same time. The Commission has also
assessed, in an in-depth review under Article 5 of Regulation (EU) No
1176/2011, whether Hungary is affected by macroeconomic imbalances. The
Commission concluded in its in-depth review[7] that Hungary
is experiencing external and internal Imbalances, although not excessive.
(9)       Based on the assessment of
the 2012 Convergence Programme pursuant to Council Regulation (EC) No 1466/97,
the Council is of the opinion that the macroeconomic scenario underpinning the
budgetary projections in the programme is optimistic. The Hungarian
authorities’ growth projections for 2012 and 2013 are higher by around half a
percentage point compared to the Commission's 2012 spring forecast on the
account of the more optimistic official assumptions regarding domestic demand,
particularly in 2013. The objective of the budgetary strategy outlined in the
programme is to ensure the sustainable correction of the excessive deficit by
the 2012 deadline set by the Council. The official deficit targets and the
planned fiscal efforts comply with the March 2012 Council recommendations based
on Article 126(7). The programme confirms the previous medium-term budgetary objective
(MTO) of 1.5% of GDP, which it plans to achieve by 2013. The MTO adequately
reflects the requirements of the Stability and Growth Pact. Based on the
(recalculated) structural budget balance[8],
progress towards the MTO does not appear to be adequate in 2013 against the
assessment of the Commission's 2012 spring forecast, which takes into account the
implementation risks related to selected saving measures and a less optimistic
macroeconomic scenario. The growth rate of government expenditure, taking into
account discretionary revenue measures, is in line with the expenditure
benchmark of the Stability and Growth Pact in 2013, but not in 2014 and in
2015. According to government plans, the public debt is continuously reduced
throughout the programme period to below 73% of GDP in 2015, but will remain
above the 60% of GDP reference value. Regarding the debt reduction benchmark,
Hungary will be in transition period in 2013-2014 and the programme would
ensure sufficient progress towards compliance with the benchmark. According to
the programme, the debt reduction benchmark would be met at the end of the
transition period, in 2015, and thereby should help to reduce the accumulated
external and internal indebtedness.
(10)     New regulations have been
adopted for the implementation of the constitutional fiscal governance
framework, but some of its features remain weak. The medium-term budgetary
planning is only indicative, the resources of the Fiscal Council are not
commensurate with its newly-granted strong veto power, and the availability of
budgetary information remains insufficient. Strengthening the medium-term
budgetary planning dimension and widening the analytical remit of the Fiscal
Council would help to ensure that the new constitutional fiscal governance
framework can play its role.
(11)     Policy responses to address
the impact of tax reform on low wage earners (minimum wage increase, wage
subsidy scheme) have not contributed to enhancing employment, whereas measures
to encourage women’s participation in the labour market are a small step in the
right direction. Making labour taxation more employment-friendly and further strengthening
measures to encourage the participation of women in the labour market,
particularly by expanding childcare and pre-school facilities, would help to improve
the employment rate.
(12)     The public employment service
has been reorganised resulting in an overall downsizing, pointing in the
opposite direction of what was recommended in 2011. In the field of active
labour market policies some measures aiming to provide tailor-made services for
disadvantaged groups, for instance, under ESF programmes, appear credible and
relevant. However, other measures aimed at disadvantaged groups (e.g. public
works) are unlikely to be effective in improving the placement of participants
in the open job market. Serious steps to strengthen the capacity of the public employment
service should be taken without delay, while keeping the right balance of
funding between public works and other active labour market policies, to help
to improve the functioning of the labour market and raise the participation rate.
Raising the growth potential through structural reform in the labour market would
also be important for a sustained reduction of the vulnerabilities stemming
from the large stock of external and internal debt. Furthermore, the national
Roma integration strategy has not been mainstreamed in other policies.
(13)     Measures to improve the
business environment largely go in the right direction, but there is
significant room for further progress. Efforts to improve access to non-bank
funding are also going in the right direction, but a comprehensive assessment
of SME policies is still missing. Hungary ranks very low on many indicators
measuring the transparency and quality of public administration, where progress
would also help in improving the stability of the institutional and policy
environment. This, in turn, could improve conditions for foreign direct
investment and would support the reduction of the significant imbalance in the
net international investment position: in particular, the ratio of reinvested
profits fell dramatically in 2009 and 2010 partly on account of the crisis but
also as a result of a number of controversial and unpredictable changes in the
policy and fiscal environment and in the legal and institutional system. The
recent trend in public funding for research and innovation (since mid-2010) is
not in line with the 2012 Annual Growth Survey priority of differentiated
growth-friendly fiscal consolidation.
(14)     The Hungarian government carried
out a higher education reform that introduced changes in the structure and
funding of higher education. In addition, elements of the new legislation on
school education risk increasing the number of early school leavers and
segregation in the Hungarian school system. The equally important issue of lifelong
learning is not sufficiently addressed. Improving education at all levels will be
important to raise the competitiveness of the Hungarian labour force.
(15)     The lack of progress in
restructuring public transport has been an important reason for budget
slippages in recent years. The vast majority of the rolling stock of public
transport companies have reached the limits of their utility. Increasing the
cross-border capacity of the electricity network could facilitate a potential
increase in trade with neighbouring countries. The national energy regulator is
not empowered to organise its structures autonomously and lacks exclusive
competence to set network tariffs including the rate of return that network
operators are allowed to earn. Regulated prices should only apply to vulnerable
customers.
(16)     In the context of the
European Semester, the Commission has carried out a comprehensive analysis of Hungary’s
economic policy. It has assessed the convergence programme and national reform programme,
and has presented an in-depth review. It has taken into account not only their
relevance for sustainable fiscal and socio-economic policy in Hungary, but also
their compliance with EU rules and guidance, given the need to reinforce the
overall economic governance of the European Union by providing EU-level input
into future national decisions. Its recommendations under the European Semester
are reflected in recommendations (1) to (7) below.
(17)     In the light of this
assessment, the Council has examined Hungary’s convergence programme, and its
opinion[9]
is reflected in particular in recommendation (1) below.
(18)     In the light of the results
of the Commission’s in-depth review and this assessment, the Council has
examined Hungary’s 2012 national reform programme and Hungary’s convergence
programme. Its recommendations under Article 6 of Regulation (EU) No 1176/2011
are reflected in particular in recommendations (1), (3), (4) and (5) below;
HEREBY RECOMMENDS that Hungary should take action within the
period 2012-2013 to:
1.           Correct the excessive
deficit by 2012 in a durable manner, by implementing the 2012 budget and reducing
the reliance on one-off measures. Thereafter, specify all structural measures necessary
to ensure a durable correction of the excessive deficit and to make sufficient progress
towards the medium-term budgetary objective (MTO), including meeting the
expenditure benchmark, and ensure sufficient progress towards compliance with
the debt reduction benchmark. To mitigate the accumulated macroeconomic
imbalances put the public debt ratio on a firm downward path.
2.           Revise the cardinal law on
economic stability by putting the new numerical rules into a binding
medium-term budgetary framework. Continue to broaden the analytical remit of
the Fiscal Council, with a view to increasing the transparency of public
finances.
3.           Make the taxation of
labour more employment-friendly by alleviating the impact of the 2011 and 2012
tax changes on low earners in a sustainable, budget-neutral manner, for example
by shifting part of the tax burden to energy taxes and recurrent taxes on
property. Strengthen measures to encourage women’s participation in the labour
market, particularly by expanding childcare and pre-school facilities.
4.           Strengthen the capacity of
the Public Employment Service to increase the quality and effectiveness of
training, job search assistance and individualised services, with particular
regard for disadvantaged groups. Strengthen the activation element in the
public work scheme through effective training and job search assistance. Implement
the National Roma Integration Strategy, and mainstream it with other policies.
5.           Implement measures
envisaged to reduce the administrative burden. Ensure that public procurement
and the legislative process support market competition and ensure a stable
regulatory and business-friendly environment for financial and non-financial
enterprises, including foreign direct investors. Reduce
tax compliance costs and establish a stable, lawful and non-distortive
framework for corporate taxation. Remove unjustifiable restrictions
on the establishment of large-scale retail premises. Provide specific
well-targeted incentive schemes to support innovative SMEs in the new
innovation strategy.
6.           Prepare and implement a
national strategy on early school-leaving by ensuring adequate financing. Ensure
that the implementation of the higher education reform improves access to
education for disadvantaged groups.
7.           Reform the public
transport system to make it more cost efficient. Increase the cross-border
capacities of the electricity network, ensure the independence of the energy
regulator and gradually abolish regulated energy prices.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 209, 02.08.1997, p. 1
[2]               OJ L 306, 23.11.2011, p. 25
[3]               COM(2012)317 final
[4]               P7_TA(2012)0048 and P7_TA(2012)0047
[5]               Council Decision 2012/238/EU of 26 April 2012
[6]               COM(2012) 68 final
[7]               SWD(2012)157 final
[8]               Cyclically adjusted balance net of one-off and
temporary measures, recalculated by the Commission services on the basis of the information provided in the programme, using
the commonly agreed methodology.
[9]               Under Article 9(2) of Council Regulation (EC) No
1466/97.


Avis juridique important

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52004SC0011

Recommendation for a Council opinion in accordance with the third paragraph of Article 9 of Council Regulation (EC) No 1466/97 of 7 July 1997 on the updated convergence programme of Sweden, 2003-2006  /* SEC/2004/0011 final */

Recommendation for a COUNCIL OPINION in accordance with the third paragraph of Article 9 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the updated convergence programme of Sweden, 2003-2006(presented by the Commission)EXPLANATORY MEMORANDUMCouncil Regulation (EC) No. 1466/97, on the strengthening of the surveillance of budgetary positions and the surveillance and co-ordination of economic policies [1], stipulated that countries not participating in the single currency were to submit convergence programmes to the Council and the Commission by 1 March 1999. In accordance with Article 9 of this Regulation, the Council had to examine each convergence programme based on the assessments prepared by the Commission and the Committee set up by Article 114 of the Treaty, the Economic and Financial Committee. The Commission adopted a recommendation on each programme. On the basis of this recommendation and after having consulted the Economic and Financial Committee, the Council delivered an opinion, following its examination of the programme. According to the Regulation, the updated convergence programmes, to be presented annually, may also be examined by the Council in accordance with these same procedures.[1]  OJ L 209, 2.8.1997. All the documents referred to in this text can be found at the following web siteSweden's convergence programme covering the period 1998-2001 was submitted on 23 December 1998 and assessed by the Council on 8 February 1999 [2] and updates were presented every following year.[2]  OJ C 68, 11.3.1999.Sweden submitted the fifth and most recent updated convergence programme, covering the period 2003-06, on 1 December 2003. The Commission services have carried out a technical evaluation of this updated programme, taking into account the information provided in accordance with the Code of Conduct [3], the Autumn forecasts as well as subsequent evaluations, the commonly agreed methodology for the estimation of cyclically-adjusted balances, the recommendations in the Broad Economic Policy Guidelines and the principles laid down in the Communication of the Commission to the Council of 27 November 2002 on strengthening the co-ordination of budgetary policies [4]. This evaluation warrants the following assessment:[3]  Revised Opinion of the Economic and Financial Committee on the content and format of stability and convergence programmes, endorsed by the ECOFIN Council on 10.7.2001.[4]  COM(2002) 668 final, 27.11.2002.The 2003 updated Swedish convergence programme covers the period 2003 to 2006 and is based on the Budget Bill for 2004. The Budget was adopted by parliament in December 2003. The updated programme provides detailed information and an elaborated description of structural issues, including the cyclical position of the economy together with its impact on public finances. In addition, the long-term sustainability of public finances is covered in some detail. This is broadly in line with Code of Conduct. According to the 2003 update, the focus of economic policy continues to be full employment and increased prosperity through high, sustainable growth. The stability-oriented macro-economic policy framework of stable prices and sound public finances remains in place.As in the rest of the EU, the Swedish economy has developed less favourably than foreseen in the 2002 update. The 2003 update projects GDP growth of 1.4% in 2003, 2.0% in 2004, 2.6% in 2005 and 2.5% in 2006. The labour market has deteriorated in 2003, with negative employment growth and a rise in the unemployment rate, and it is not expected to recover until 2005. This scenario is broadly in line with the Commission's evaluation including the Autumn forecast, though the Commission's forecast foresees somewhat weaker labour market developments.Public finances in Sweden remain in good shape, owing to a successful fiscal consolidation programme initiated in the mid-1990s, and a strengthened budgetary framework with an ambitious medium-term surplus target 2% of GDP on average over the cycle. In the 2003 update, a surplus of 0.4% of GDP in 2003 is targeted, followed by gradually higher surpluses in the years to 2006. Moreover, the gross debt ratio - below 60% of GDP since 2000 - is projected to continue to decline and reach 48.3% of GDP in 2006 and the low net debt ratio is expected to turn into a net claim in 2006. The Commission's view is in line with these projections.The considerable fiscal stimulus in 2002 - which was possible given the existing sound fiscal position - and the prolonged period of relatively subdued economic growth weighs on the government finances. Nevertheless, the cyclically-adjusted fiscal position is expected to remain sound and to strengthen gradually, although remaining lower than the 2% of GDP target in each year to 2005, according to both the Commission's analysis and the estimates in the 2003 update.The main instruments for maintaining sound government finances continue to be i) the expenditure ceilings for central government and ii) the balanced budget constraint for local governments. The budgetary margin included under the ceiling for 2004 is very narrow, suggesting that close monitoring remains important and corrective measures might be called for in case of worse-than-expected developments. For 2005 and 2006, the budgetary margins are appropriately larger. According to calculations in the update, the 2% of GDP surplus target will be met on average over the period 2000-2006. However, this hinges inter alia on the achievement of the expenditure ceiling in 2004 and expenditure plans in 2005 and 2006 for central government, suggesting that there is little room, if any, for further deterioration in this respect. The 2003 update projects that the balanced budget requirement is met for the local government sector during the period 2004-06. In order for local governments to comply with the balanced budget constraint, several local governments raised tax rates in 2003. Some additional rises are foreseen in 2004. Despite this, some of the larger local governments appear to face great difficulties in achieving balance, resulting in proposed rises in both taxes and charges. If local governments are to achieve a balanced budget, they may be forced to raise taxes further. This could, all else equal, reverse the achievement in recent years of reducing the overall tax burden, which in turn could have adverse effects on economic growth.The 2003 update includes a detailed section on the likely impact of ageing population on public finances. Age-related expenditures are expected to increase by 6.7% of GDP between 2007 and 2050. On the basis of current policies, Sweden appears to be in a relatively good position to meet the budgetary costs associated with ageing populations. Long term projections show that gross debt will stay below 60% of GDP at all times and that the adjusted gross debt will fall close to zero. This is largely due to the reformed pension system and the medium term strategy to come back to a structural surplus of 2% of GDP. However, the increase of health care expenditure, including expenditure related to ill health, foreseen in the projections needs to be addressed as the update notes that further measures are necessary in order to achieve the target of half the number of sick days. Moreover, according to the Commission's analysis the medium term target has to be reached; failure to do so can determine some budgetary unbalances in the very long term. In addition, as noted in the Broad Economic Policy Guidelines, "additional efforts appear necessary to improve further the incentives to work, notably as Sweden still has the highest overall tax burden in the EU and relatively generous benefit schemes in an international perspective".Inflation in Sweden has come down recently, after having been relatively high due to temporary factors in the beginning of 2003. New wage agreements for the most part of the labour market are expected to be reached in the beginning of 2004. So far, it appears likely that wage increases will remain moderate, in party linked to poor labour market developments.Over the past year, developments in Swedish bond yields have been in line with trends in international bond markets. The 2003 update states that entering ERM II is not under consideration. Compared to developments in previous years, the krona has been relatively stable in 2002 and 2003.In order to obtain sustainable economic growth, structural measures are being undertaken with a view to enhancing the supply side of the economy. However, some planned measures could have an adverse impact on labour supply. In this context, the programme strategy is broadly consistent with the Broad Economic Policy Guidelines. Completing the tax reform and efforts to reach the key policy objectives of raising employment, reducing the number of social security recipients and days of sick-leave should be given priority within the framework of sound public finances.Based on this assessment, the Commission has adopted the attached recommendation for a Council opinion on the convergence programme update of Sweden and is forwarding it to the Council.Recommendation for a COUNCIL OPINION in accordance with the third paragraph of Article 9 of Council Regulation (EC) No 1466/97 of 7 July 1997 On the updated convergence programme of Sweden, 2003-2006THE COUNCIL OF THE EUROPEAN UNION,Having regard to the Treaty establishing the European Community,Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and co-ordination of economic policies [5], and in particular Article 9 (3) thereof,[5]  OJ L 209, 2.8.1997.Having regard to the recommendation of the Commission,After consulting the Economic and Financial Committee,HAS DELIVERED THIS OPINION:On 20 January 2004 the Council examined Sweden's updated convergence programme, which covers the period 2003 - 2006. The updated programme broadly complies with the data requirements of the revised "code of conduct" on the content and format of stability and convergence programmes.The budgetary strategy underlying the update is based on a continuation of the medium term objective of a budget surplus of 2% of GDP on average over the cycle, aimed at preparing for the expected budgetary impact of the ageing of the population and the sustainability of public finances in the long-term. The planned return to a general government surplus of 2% of GDP beyond 2006 relies in particular on a decline in the expenditure-to-GDP ratio from 2004 onwards which is expected to rise in 2003, but also on a decline in the revenue-to-GDP ratio from 2005 onwards which is expected to rise in 2003 and remain unchanged in 2004.The update projects real GDP growth to accelerate from an estimated 1.4% in 2003 to 2.0% in 2004. In 2005 and 2006, growth is estimated to be 2.6% and 2.5%, respectively. Employment growth is expected to pick up from 0.1% in 2004 to 0.7% in 2005 and 2006. CPI inflation is forecast to gradually increase from 1.3% in 2004 to slightly above 2% by 2006. On the basis of currently available information, the macroeconomic scenario underlying the update seems realistic and is in line with the Commission evaluation including the autumn forecast.The update targets a general government surplus of 0.6% of GDP in 2004, compared with an expected surplus of 0.4% in 2003. In cyclically-adjusted terms, based on Commission calculations according to the commonly agreed methodology, there is an improvement from 0.5% to 1% of GDP. For 2005 and 2006, the projections are for headline surpluses of 1.4% and 1.9% of GDP, respectively. In cyclically-adjusted terms, the corresponding surpluses would amount to 1.8% and 2.3% of GDP, respectively. The debt ratio is projected to decline gradually, from 51.7% in 2003 to 48.3% in 2006.The budgetary stance in the programme should provide a sufficient safety margin against breaching the 3% of GDP deficit threshold with normal macroeconomic fluctuations. Under plausible macroeconomic and budgetary assumptions, the medium-term objective of a budgetary position of close to balance or in surplus should be maintained throughout the programme period.However, on the basis of the Commission's analysis and the estimates in the 2003 update, the cyclically adjusted budgetary position is expected to be in surplus but below Sweden's 2% of GDP surplus target in the years to 2005. This results from the fact that the considerable fiscal stimulus in 2002 is only partially reversed in the following years. Strict expenditure control therefore remains important in this respect, not least by ensuring continued adherence to the expenditure ceiling in 2004 and the expenditure plans in 2005 and 2006.On the basis of current policies, Sweden should be able to meet the projected budgetary costs of an ageing population. However, the increase of health care expenditure, including expenditure related to ill health, foreseen in the projections needs to be addressed as the update notes that further measures are necessary in order to achieve the target of half the number of sick days. Moreover, according to the Commission's analysis the medium term target has to be reached; failure to do so can determine some budgetary unbalances in the very long term.The economic policies as reflected in the updated programme are broadly consistent with the recommendations in the Broad Economic Policy Guidelines. However, some planned measures could have an adverse impact on labour supply. Completing the tax reform, and efforts to reach the key policy objectives of raising employment, reducing the number of social security recipients and days of sick-leave should be given priority within the framework of sound public finances.