title: Council Recommendation of 9 July 2013 on the National Reform Programme 2013 of the United Kingdom and delivering a Council opinion on the Convergence Programme of the United Kingdom, 2012/13 to 2017/18

text:
               30.7.2013

               EN

               Official Journal of the European Union

               C 217/93

      COUNCIL RECOMMENDATION

   of 9 July 2013
   on the National Reform Programme 2013 of the United Kingdom and delivering a Council opinion on the Convergence Programme of the United Kingdom, 2012/13 to 2017/18
   2013/C 217/23
   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 9(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,
   Having regard to the conclusions of the European Council,
   Having regard to the opinion of the Employment Committee,
   Having regard to the opinion of the Economic and Financial Committee,
   Having regard to the opinion of the Social Protection Committee,
   Having regard to the opinion of the Economic Policy Committee,
   Whereas:

               (1)

               On 26 March 2010, the European Council agreed to the Commission’s proposal to launch a new strategy for jobs and growth, Europe 2020, based on enhanced coordination of economic policies, which focuses 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, it 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 29 June 2012, the Member States’ Heads of State or Government decided on a Compact for Growth and Jobs, providing a coherent framework for action at national, EU and euro area levels using all possible levers, instruments and policies. They decided on action to be taken at the level of the Member States, in particular expressing full commitment to achieving the objectives of the Europe 2020 strategy and to implementing the country-specific recommendations.

               (4)

               On 10 July 2012, the Council adopted a Recommendation (4) on the UK’s National Reform Programme for 2012 and delivered its opinion on the UK’s Convergence Programme for 2012-2017.

               (5)

               On 28 November 2012, the Commission adopted the Annual Growth Survey, marking the start of the 2013 European Semester for economic policy coordination. Also on 28 November 2012, the Commission, on the basis of Regulation (EU) No 1176/2011, adopted the Alert Mechanism Report, in which it identified the UK as one of the Member States for which an in-depth review would be carried out.

               (6)

               The European Parliament has been duly involved in the European Semester, in accordance with Regulation (EC) No 1466/97, and, on 7 February 2013, adopted a resolution on employment and social aspects in the Annual Growth Survey 2013 and a resolution on the contribution to the Annual Growth Survey 2013.

               (7)

               On 14 March 2013, 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.

               (8)

               On 10 April 2013, the Commission published the results of its in-depth review for the UK, under Article 5 of Regulation (EU) No 1176/2011. The Commission’s analysis leads it to conclude that the UK is experiencing macroeconomic imbalances, which deserve monitoring and policy action. In particular, macroeconomic developments in the area of household debt, linked to the high levels of mortgage debt and the characteristics of the housing market, as well as unfavourable developments in external competitiveness, especially as regards goods exports and weak productivity growth, continue to deserve attention.

               (9)

               On 30 April 2013, the UK submitted its Convergence Programme for the period 2012/13 to 2017/18 and its 2013 National Reform Programme. In order to take account of their interlinkages, the two Programmes have been assessed at the same time.

               (10)

               Pursuant to paragraph 4 of the Protocol (No 15) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland, the obligation in Article 126(1) of the Treaty on the Functioning of the European Union to avoid excessive general government deficits does not apply to the UK. Paragraph 5 of the Protocol provides that the UK is to endeavour to avoid an excessive government deficit. On 8 July 2008 the Council decided, in accordance with Article 104(6) of the Treaty establishing the European Community, that an excessive deficit exists in the UK.

               (11)

               Based on the assessment of the Convergence Programme pursuant to Regulation (EC) No 1466/97, the Council is of the opinion that the macroeconomic scenario underpinning the budgetary projections in the Programme is plausible. The objective of the budgetary strategy outlined in the Convergence Programme is to achieve a cyclically-adjusted current budget of close to balance at the end of a five-year rolling period. The general government deficit peaked at 11,5 % of GDP in 2009/10 (5) and was reduced to 5,6 % of GDP in 2012/13, due to one-off measures that reduced the deficit by 2 percentage points in 2012/13. However, the Convergence Programme shows that the Government is projected to miss the deadline of 2014/15 for correction of the excessive deficit set by the Council as the deficit is estimated at 6,0 % of GDP that year. According to programme projections, the year in which the excessive deficit will be corrected is in 2017/18 at 2,3 % of GDP, three years after the deadline set by the Council in December 2009. The Convergence Programme implies that the structural general government deficit, as recalculated by the Commission, improving marginally from 5,6 % of GDP in 2013/14 to 5,1 % of GDP in 2014/15. Over the period 2010/11 to 2012/13, the average non-adjusted fiscal effort is estimated at 1,1 % of GDP, well below the 1¾ % of GDP recommended by the Council, before correcting for the impact of any revisions to potential output growth, or revenue windfalls or shortfalls. The main risks to the budgetary projections stem from lower-than-expected growth due to persistently high inflation curtailing private consumption and a potential deterioration in the international environment that could affect trade and investment.
               The Convergence Programme does not include a medium-term budgetary objective (MTO) as foreseen by the Stability and Growth Pact. The Government has continued with its fiscal consolidation strategy but, because of higher-than-expected expenditure due to the operation of automatic stabilisers and lower-than-expected tax revenues, the deficit is higher than forecast. Also, the consolidation measures taken so far have not been sufficient in attaining the annual average fiscal effort recommended to correct the excessive deficit. Moreover, the potential revenue contribution from structural reform, e.g. aiming to increase the efficiency of the tax system through revisions of the VAT rate structure, remains relatively under-exploited. Government debt as a percentage of GDP rose from 56,1 % in 2008/09 to 90,7 % in 2012/13. According to the Convergence Programme, the general government debt ratio is projected to increase to 100,8 % in 2015/16 and 2016/17 before falling back to 99,4 % in 2017/18.

               (12)

               Household deleveraging continued in 2012, but at 96 % of GDP, UK household debt remains well above the euro area average and deleveraging may not be sustained once the economy improves and housing transactions return to more normal levels. House prices remain high and volatile in the context of a housing shortage. Because of a combination of high house prices and the widespread use of variable-rate mortgages, households are particularly exposed to interest rate changes, as well as to rises in unemployment. The Government has taken action to reform the spatial planning laws but residential construction remains at a low level and the planning system, including green belt restrictions, continues to be an important constraint on the supply of housing. Government interventions that stimulate housing demand more than supply, including the recently announced Help-to-Buy scheme, could potentially exacerbate this situation by increasing house prices and household debt. The UK property tax system combines a regressive recurring tax (Council Tax) with a progressive transaction tax (Stamp Duty Land Tax). A combination of high house prices, stretched household finances and more responsible lending criteria are likely to continue to prevent many middle-income households from becoming home owners. In this context, private renting could be made a more attractive and viable long-term alternative to home ownership.

               (13)

               The UK faces the challenges of both unemployment and underemployment, especially among the young. Unemployment stood at 7,8 % at the beginning of 2013, compared with the EU average of 10,9 %, and is expected to remain broadly flat through 2013 and 2014. Youth unemployment is much higher, at 20,7 % and it has steadily increased since 2007, when it stood at 14,3 %. The proportion of young people not in education, employment or training is 14,0 %. Private sector employment has grown strongly in the last year, given the slow GDP growth, but productivity and wage growth have been weak. The UK also has an oversupply of low-skilled workers for whom demand is falling. At the same time, the UK has a shortage of workers with high-quality vocational and technical skills which contributes to a lack of external competitiveness. Despite some progress in recent years, a significant proportion of young people do not have the skills and qualifications they need to compete successfully in the labour market. The unemployment rate of low skilled 15-25 year olds is 37,2 %, significantly above the EU average. Existing vocational education and training policy has been too focused on basic skills and level 2 qualifications, while the economy increasingly demands more advanced qualifications. While there have been efforts to improve the quality of apprenticeship programmes, further efforts are needed. In particular, the qualifications system remains very complex, which may negatively impact on businesses’ involvement in apprenticeship programmes. The UK could build on the current Youth Contract to implement a Youth Guarantee and address the problem of youth unemployment and those not in education, employment or training.

               (14)

               Weak work incentives have been a persistent problem in the UK. The authorities plan to address this with the introduction of the Universal Credit, which will allow individuals to keep more of their benefit income as they move into work. Whilst Universal Credit could have a positive impact on employment much will depend on effective implementation and support services, including the interaction with other benefits. In parallel, many working-age benefits and tax credits will be increased by 1 % a year until 2016 which is below the projected inflation rate but should also improve work incentives. A range of other reforms to welfare benefits were also introduced in April 2013. There is a risk of increased poverty, including more child poverty for those in households that do not find employment. In contrast, the scope, level and uprating of both universal and means-tested payments to pensioners have been largely exempt from cuts. Early results from the Work Programme suggest scope to improve the delivery and outcomes. The UK also faces ongoing challenges to increase parental employment and improve access to high-quality, affordable childcare. At 17,3 %, the proportion of UK children living in workless households is the second highest in the Union. Currently, childcare costs in the UK are among the highest in the Union, which poses particular problems for second earners in couples, and for single parents. In 2010, only 4 % of children under three used formal childcare on a full-time basis, well below the EU average of 14 %.

               (15)

               The stock of UK corporate debt is fairly high, yet some firms are having difficulty accessing credit, and business investment remains at very low levels. An unprecedented drop in business investment after 2007 caused gross fixed capital formation to fall to 14,2 % of GDP in 2012. This is the third lowest level in the Union. The UK has a low level of business expenditure on R&D, which fell from 1,17 % of GDP in 2001 to 1,09 % in 2011. Business investment has started to pick up slightly, with an annual increase of 4,9 % in 2012, but remains low. Net lending to the corporate sector remained negative in 2012. While larger firms with strong balance sheets are able to borrow at a historically low cost, many other firms, particularly SMEs, are having difficulty accessing credit. This is exacerbated by limited competition in the banking industry. Proper implementation of the Financial Policy Committee’s recommendations on prudent reckoning of bank capital requirements and on addressing identified capital shortfalls without hindering lending to the economy should help reinforce the financial stability of the UK banking system.

               (16)

               The UK has a challenge to renew and upgrade its energy and transport infrastructure. Furthermore, the UK needs substantial investment in new electricity generation capacity by 2020, both to replace old plants that are due to close, and to meet the renewables obligation and tighter carbon emissions standards. At 3,8 %, the share of renewable energy sources in final energy consumption ranks 25th out of 27 Member States (EU average 13,0 %). Regulatory certainty will be required to facilitate adequate and timely investment. Shortcomings in the capacity and quality of the UK’s transport networks are a structural problem for the economy, especially for goods producers, distributors and exporters. There is currently a significant gap between committed funding, public and private, and the pipeline of transport investment needs which the Government is seeking to address by prioritising public spending towards infrastructure and by attracting additional private investment. Unit costs in transport construction and maintenance also remain high in the UK.

               (17)

               In the context of the European Semester, the Commission has carried out a comprehensive analysis of the UK’s economic policy. It has assessed the Convergence Programme and National Reform Programme, and presented an in-depth review. It has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in the UK but also their compliance with EU rules and guidance, given the need to reinforce the overall economic governance of the Union by providing EU-level input into future national decisions. Its recommendations under the European Semester are reflected in recommendations (1) to (6) below.

               (18)

               In the light of this assessment, the Council has examined the Convergence Programme, and its opinion (6) is reflected in particular in recommendation (1) below.

               (19)

               In the light of the Commission’s in-depth review and this assessment, the Council has examined the National Reform Programme and the Convergence Programme. Its recommendations under Article 6 of Regulation (EU) No 1176/2011 are reflected in recommendations (2), (3), (5) and (6) below,

         HEREBY RECOMMENDS that the United Kingdom take action within the period 2013-2014 to:

               1.

               Implement a reinforced budgetary strategy, supported by sufficiently specified measures, for the year 2013/14 and beyond. Ensure the correction of the excessive deficit in a sustainable manner by 2014/15, and the achievement of the fiscal effort specified in the Council recommendations under the EDP and set the high public debt ratio on a sustained downward path. A durable correction of the fiscal imbalances requires the credible implementation of ambitious structural reforms which would increase the adjustment capacity and boost potential growth. Pursue a differentiated, growth-friendly approach to fiscal tightening, including through prioritising timely capital expenditure with high economic returns and through a balanced approach to the composition of consolidation measures and promoting medium and long-term fiscal sustainability. In order to raise revenue, make greater use of the standard rate of VAT.

               2.

               Take further action to increase housing supply, including through further liberalisation of spatial planning laws and an efficient operation of the planning system. Ensure that housing policy, including the Help-to-Buy scheme does not encourage excessive and imprudent mortgage lending; and promote greater supply to avoid higher house prices. Pursue reforms including to land and property taxation to reduce distortions and promote timely residential construction. Take steps to improve the functioning of rental markets, in particular by making longer rental terms more attractive to both tenants and landlords.

               3.

               Building on the Youth Contract, step up measures to address youth unemployment, for example through a Youth Guarantee. Increase the quality and duration of apprenticeships, simplify the system of qualifications and strengthen the engagement of employers, particularly in the provision of advanced and intermediate technical skills. Reduce the number of young people aged 18-24 who have very poor basic skills, including through effectively implementing the Traineeships programme.

               4.

               Enhance efforts to support low-income households and reduce child poverty by ensuring that the Universal Credit and other welfare reforms deliver a fair tax-benefit system with clearer work incentives and support services. Accelerate the implementation of planned measures to reduce the costs of childcare and improve its quality and availability.

               5.

               Take further steps to improve the availability of bank and non-bank financing to the corporate sector, while ensuring that the measures primarily target viable companies, especially SMEs. Reduce barriers to entry in the banking sector, lower switching costs and facilitate the emergence of challenger banks through a divestiture of banking assets. Effectively implement the Financial Policy Committee’s recommendations on prudent assessment of bank capital requirements and on addressing identified capital shortfalls.

               6.

               Take measures to facilitate a timely increase in network infrastructure investment, especially by promoting more efficient and robust planning and decision-making processes. Provide a stable regulatory framework for investment in new energy capacity, including in renewable energy. Improve the capacity and quality of transport networks by providing greater predictability and certainty on planning and funding and by harnessing the most effective mix of public and private capital sources.

      Done at Brussels, 9 July 2013.

            For the Council

            The President

         R. ŠADŽIUS

      (1)  OJ L 209, 2.8.1997, p. 1.

      (2)  OJ L 306, 23.11.2011, p. 25.

      (3)  Maintained for 2013 by Council Decision 2013/208/EU of 22 April 2013 on guidelines for the employment policies of the Member States (OJ L 118, 30.4.2013, p. 21).

      (4)  OJ C 219, 24.7.2012, p. 91.

      (5)  The period ‘2009/10’ refers to the financial year which starts on 1 April 2009 and ends on 31 March 2010.

      (6)  Under Article 9(2) of Regulation (EC) No 1466/97.


Avis juridique important

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31979K0165

Commission Recommendation No 165/79/ECSC of 30 January 1979 providing for the suspension of definitive anti- dumping duties established in relation to imports of steel products originating in Bulgaria

Official Journal L 022 , 31/01/1979 P. 0011 - 0011 Spanish special edition: Chapter 11 Volume 28 P. 0010  Portuguese special edition Chapter 11 Volume 28 P. 0010

****( 1 ) OJ NO L 114 , 5 . 5 . 1977 , P . 6 .  ( 2 ) OJ NO L 352 , 31 . 12 . 1977 , P . 13 .  ( 3 ) OJ NO L 19 , 24 . 1 . 1978 , P . 9 .  ( 4 ) OJ NO L 37 , 7 . 2 . 1978 , P . 13 .  ( 5 ) OJ NO L 108 , 22 . 4 . 1978 , P . 26 .  ( 6 ) OJ NO L 120 , 4 . 5 . 1978 , P . 22 .    COMMISSION RECOMMENDATION NO 165/79/ECSC   OF 30 JANUARY 1979   PROVIDING FOR THE SUSPENSION OF DEFINITIVE ANTI-DUMPING DUTIES ESTABLISHED IN RELATION TO IMPORTS OF STEEL PRODUCTS ORIGINATING IN BULGARIA   THE COMMISSION OF THE EUROPEAN   COMMUNITIES ,   HAVING REGARD TO THE TREATY ESTABLISHING THE EUROPEAN COAL AND STEEL COMMUNITY , AND IN PARTICULAR ARTICLE 74 THEREOF ,   HAVING REGARD TO COMMISSION RECOMMENDATION 77/329/ECSC OF 15 APRIL 1977 ON PROTECTION AGAINST DUMPING OR THE GRANTING OF BOUNTIES OR SUBSIDIES BY COUNTRIES WHICH ARE NOT MEMBERS OF THE EUROPEAN COAL AND STEEL COMMUNITY ( 1 ), AS AMENDED BY RECOMMENDATION NO 3004/77/ECSC ( 2 ), AND IN PARTICULAR ARTICLES 15 AND 19 THEREOF ,   HAVING HEARD THE OPINIONS EXPRESSED WITHIN THE ADVISORY COMMITTEE PROVIDED FOR BY RECOMMENDATION 77/329/ECSC ,   WHEREAS THE COMMISSION HAS ESTABLISHED , BY RECOMMENDATIONS NO 121/78/ECSC ( 3 ) AND NO 245/78/ECSC ( 4 ), PROVISIONAL ANTI-DUMPING DUTIES IN RELATION TO IMPORTS OF STEEL PRODUCTS ORIGINATING IN BULGARIA ;   WHEREAS THE COMMISSION HAS ESTABLISHED , BY RECOMMENDATIONS NO 811/78/ECSC ( 5 ) AND NO 932/78/ECSC ( 6 ), DEFINITIVE ANTI-DUMPING DUTIES IN RELATION TO IMPORTS OF STEEL PRODUCTS ORIGINATING IN BULGARIA ;   WHEREAS SINCE THAT TIME CERTAIN ARRANGEMENTS HAVE BEEN MADE BETWEEN THE COMMUNITY AND THE BULGARIAN GOVERNMENT WITH RESPECT TO TRADE IN STEEL PRODUCTS ;   WHEREAS THESE ARRANGEMENTS , WHICH THE COMMISSION DEEMS REASONABLE , ALLOW THE FURTHER APPLICATION OF DEFINITIVE ANTI-DUMPING DUTIES TO BE SUSPENDED ,   HAS ADOPTED THIS RECOMMENDATION :   ARTICLE 1   THE APPLICATION OF DEFINITIVE ANTI-DUMPING DUTIES ESTABLISHED BY COMMISSION RECOMMENDATIONS NO 811/78/ECSC AND NO 932/78/ECSC , IN RELATION TO IMPORTS OF STEEL PRODUCTS ORIGINATING IN BULGARIA , IS SUSPENDED FROM THE DATE OF THE ENTRY INTO FORCE OF THIS RECOMMENDATION .   NO OTHER ANTI-DUMPING DUTY OR OTHER SIMILAR MEASURE WILL BE APPLIED TO IMPORTS OF STEEL PRODUCTS FALLING UNDER THE ECSC TREATY AND ORIGINATING IN BULGARIA UNLESS A COUNTER-RECOMMENDATION IS MADE BY THE COMMISSION .   ARTICLE 2   THIS RECOMMENDATION IS ADDRESSED TO THE MEMBER STATES . IT SHALL ENTER INTO FORCE IN RESPECT OF EACH MEMBER STATE FROM THE DATE OF ITS PUBLICATION IN THE OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITIES .   DONE AT BRUSSELS , 30 JANUARY 1979 .   FOR THE COMMISSION   WILHELM HAFERKAMP   VICE-PRESIDENT


title: 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 Portugal, 2006-2010

text:
Important legal notice

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52007SC0188

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 Portugal, 2006-2010  /* SEC/2007/0188 final */

	[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |Brussels, 13.2.2007SEC(2007) 188 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 Portugal, 2006-2010(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 Portugal was submitted in December 1998. In accordance with the Regulation, the Council delivered an opinion on it on 8 February 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 Portugal, submitted on 15 December 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 country’s position under the corrective arm of the Stability and Growth Pact (excessive deficit procedure)3.  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) and4.  the Commission’s assessment of the October 2006 national reform programme.2.1. Recent economic and budgetary performanceAfter a phase of strong economic growth reflecting dynamic domestic demand and a boost in productivity in the second half of the nineties, in the run-up to euro adoption, low growth after 2000 implied a halt in the convergence process. This resulted from limited progress on key features of the economy. First, the adjustment on the supply side seems to have been insufficient to support the catching-up process in a more substantial way. At the same time, important sectors are still adjusting to the challenges of globalisation. Second, as income has not expanded as quickly as spending, debt is at high levels and the external deficit has been sizeable, mainly driven by a trade deficit. Third, public finances have been fragile largely as the result of the missed opportunity to consolidate in "good times" and of the significant increase in the deficit during the downturn.2.2. The excessive deficit procedure for PortugalOn 20 September 2005, the Council adopted a decision stating that Portugal had an excessive deficit in accordance with Article 104(6). At the same time, the Council addressed a recommendation under Article 104(7) specifying that the excessive deficit had to be corrected by 2008. In particular, Portugal was recommended to limit the deterioration of the fiscal position in 2005 and to ensure a correction of the structural deficit of some 1.5% of GDP in 2006, followed by a further decrease of, at least, ¾% of GDP in both 2007 and 2008.After the expiry of the 6-months deadline established by the Council for the Portuguese government to take effective action in order to achieve the 2006 deficit target, the Commission carried out an assessment of the efforts made by the Portuguese authorities. The conclusions of the Commission communication adopted on 22 June 2006 were as follows: based on the information available at the time, it appeared that Portugal had taken action representing adequate progress towards the correction of the excessive deficit within the time limits set by the Council and that no further steps in the excessive deficit procedure of Portugal were necessary. In its meeting of 11 July 2006, the Council concurred with this assessment.2.3. The assessment in the Council opinion on the previous programmeOn 14 March 2006, the Council adopted its opinion on the previous update of the stability programme, covering the period 2005-2009. The Council was of the opinion that “the programme is broadly consistent with a correction of the excessive deficit by 2008, subject to a full implementation of the measures announced in the programme that need to be reinforced for the years 2007 and beyond to accommodate the downward risks to the budgetary targets”. The Council invited Portugal to“(i) adopt and implement with rigour the structural measures envisaged in the programme in order to ensure the correction of the excessive deficit by 2008 in a credible and sustainable manner; ensure a continued adjustment towards the MTO, once the excessive deficit has been corrected, in line with the SGP requirements; and create margins to deal with the budgetary impact of possible lower-than-projected economic growth;(ii) enact decisively the planned measures to control expenditure; improve the budgetary process at all levels of general government, possibly through the more extensive use of binding expenditure ceilings and, as outlined in the programme, by strengthening mechanisms of monitoring, controlling and reporting expenditure and revenue;(iii) improve the long-term sustainability of public finances, in particular by implementing the measures already envisaged in the programme and by enacting further reforms in the area of pensions and health care;(iv) and, bring the government gross debt ratio onto a firm downward path by ensuring that it reflects both the progress in the reduction of the government deficit and the projected privatisation proceeds, and by considering carefully the impact on debt of major public investment projects, including those in partnership with the private sector”.2.4. The Commission assessment of the October 2006 national reform programmeThe Implementation Report of the National Reform Programme of Portugal, provided in the context of the renewed Lisbon strategy for growth and jobs, was submitted on 20 October 2006. Portugal’s National Reform Programme identifies as key challenges/priorities: strengthening budgetary consolidation; reform of public administration; fostering scientific and technological development; and increasing the qualification levels of the population.The Commission’s assessment of that programme (adopted as part of its December 2006 Annual Progress Report[2]) showed that Portugal is making good progress on implementing the measures in the National Reform Programme, especially in the macro and micro-economic areas. On employment related policies, there has also been progress, especially on reforming education and training, but the important area of the adaptability of the labour market and flexicurity is not yet being fully addressed. Considerable further efforts across all policy areas will be necessary to fully achieve the objectives of the programme, given their welcome ambition and Portugal’s point of departure.Against the background of strengths and weaknesses identified, Portugal was recommended to take action in the areas of: fiscal consolidation and public administration; education and vocational training; and employment protection and labour market segmentation.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 Portugal, 2006-2010THE 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:5.  On [27 February 2007] the Council examined the updated stability programme of Portugal, which covers the period 2006 to 2010.6.  The macroeconomic scenario underlying the programme envisages that real GDP growth will pick up from 1.4% in 2006 to 1.8% in 2007 and 2.4% in 2008 and eventually to 3% per year over the rest of the programme period. Assessed against currently available information, this scenario appears to be based on favourable growth assumptions, notably for the outer years, with the output gap closing rapidly. The programme’s projections for inflation appear realistic.7.  For 2006, the general government deficit is estimated at 4.6% of GDP in the Commission services’ autumn 2006 forecast and in the new update, which would correspond to the target set in the previous update of the stability programme. According to the new update, both total government revenue and expenditure level targets have been largely met. As percent of GDP, both ratios are somewhat lower than in the Commission services' autumn 2006 forecast.8.  The main goal of the programme's medium-term budgetary strategy is a lasting correction of the large fiscal imbalances, notably a reduction of the general government deficit to below the 3% of GDP reference value in the year 2008 and further budgetary consolidation thereafter. Substantial steps towards fiscal consolidation are planned throughout the programme period: the government deficit is targeted to gradually decline from 4.6% of GDP in 2006 to 0.4% in 2010; the adjustment path for the primary balance is similar, with an improvement from a deficit of 1.7% of GDP in 2006 to a surplus of 2.5% in 2010. The planned deficit reduction is to be achieved mainly by curbing primary expenditure, the overall level of which is to decline in real terms over the programme period thanks to corrective measures of a structural nature concentrated on restructuring central government, personnel and public services and also on controlling social security and health expenditure. In the earlier years of the programme, higher tax revenues coming mainly from an increase in some rates and lower tax benefits will also contribute to fiscal consolidation. The programme confirms the planned adjustment outlined in the December 2005 update of the stability programme against a largely unchanged macroeconomic scenario.9.  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 3½% of GDP in 2006 to ½% by 2010. Over the programme period, the structural balance is planned to be reduced by an average of almost ¾% of GDP per year. The medium-term objective (MTO) for the budgetary position presented in the programme is a structural deficit of 0.5% of GDP, which the programme aims to achieve by 2010, one year earlier than implicitly targeted in the previous programme. As the MTO is more demanding than the minimum benchmark (estimated at a deficit of around 1½% 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.10.  The budgetary outcomes are subject to downside risks deriving, in particular, from the impact of the measures to contain government spending. Against the backdrop of a difficult macroeconomic environment, the government has recently implemented decisive measures to tackle expenditure growth, notably in public administration, health care and social welfare, in addition to the new legal framework to improve the fiscal developments of regional and local governments. Others measures partly also relating to the government sector, are still in preparation. The budgetary relief to be expected from these measures is nevertheless subject to considerable uncertainty, notably for 2008 and beyond. Since fiscal consolidation relies crucially on expenditure retrenchment, further progress with the ongoing improvement of the budgetary framework and implementation of mechanisms of assessing and controlling budgetary execution will also be instrumental to the achievement of the budgetary targets. As mentioned above, the favourable macroeconomic scenario raises the risk of a less marked recovery of economic activity thus providing more moderate relief to government finances. The assumptions about the elasticity of tax revenue to economic activity appear somewhat optimistic in 2007, and depending on a further improvement in tax collection, although plausible for the rest of the programme period. Finally, the performance of public enterprises provides a budgetary risk in the medium term.11.  In view of this risk assessment, the budgetary stance in the programme is broadly consistent with a correction of the excessive deficit by 2008 as recommended by the Council, provided the measures announced in the programme are fully and effectively implemented and reinforced in case of lower-than-projected economic growth. Following the correction of the excessive deficit, the programme targets an adjustment that is in line with the Pact. However, taking into account the risks to the budgetary targets, the budgetary stance in the programme does not seem to provide a sufficient safety margin against breaching the 3% of GDP deficit threshold with normal macroeconomic fluctuations until the end of the programme period. Consequently, the MTO would not be reached by 2010, as envisaged in the programme. Thus, in the years following the correction of the excessive deficit, the adjustment towards the MTO outlined in the programme could require reinforcing the measures to be 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.12.  Government gross debt is estimated to have reached 67½% of GDP in 2006, above the 60% of GDP Treaty reference value. The programme projects the debt ratio to increase in 2007 and to decline by close to 6 percentage points over the rest of the programme period. The evolution of the debt ratio is subject to the risks to the budgetary targets mentioned above and continued uncertainty about the stock-flow adjustment, which has tended to be large and predominantly debt-increasing in the past. In view of this risk assessment, the debt ratio would start to be sufficiently diminishing towards the reference value at the end of the programme period.13.  Portugal has recently enacted pension reforms aimed at strengthening the sustainability of the public finances. Estimates in the programme suggest that the overall increase in age-related expenditure over the coming decades would be significantly lower as a result of the reform, though remaining sizeable. The initial budgetary position, albeit improved compared with 2005, still constitutes a risk to sustainable public finances even before the long-term budgetary impact of an ageing population is considered. Moreover, the current level of gross debt is above the Treaty reference value. Overall, Portugal appears to be at high risk with regard to the sustainability of public finances. The planned budgetary consolidation coupled with further containment of the age-related expenditure would contribute to reducing such risks.14.  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 systematic information on the direct budgetary costs or savings of the main reforms envisaged in the National Reform Programme and its budgetary projections explicitly take into account the public finance implications of the actions outlined therein. 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, both programmes address the linkages between public administration reform and the fiscal consolidation strategy and provide complementary information on various policy measures.15.  The budgetary strategy in the programme is broadly consistent with the broad economic policy guidelines included in the integrated guidelines for the period 2005-2008.16.  As regards the data requirements specified in the code of conduct for stability and convergence programmes, the programme provides all required and most of the optional data[6]. However, it deviates on some material points from the model structure specified in the code of conduct[7].The overall conclusion is that the programme is broadly consistent with a correction of the excessive deficit by 2008, conditional on a full and effective implementation of the measures announced therein and on the reinforcement of such measures in case of lower-than-projected economic growth. After the correction of the excessive deficit, the programme envisages adequate progress towards the medium-term objective, but there are risks to the achievement of the budgetary targets. In view of the above assessment, and also in the light of the recommendation under Article 104(7) of 20 September 2005, Portugal is invited to:(i) implement with rigour the structural measures envisaged in the programme so as to correct the excessive deficit by 2008 and stand ready to reinforce these measures to deal with the budgetary impact of possible lower-than-projected economic growth;(ii) once the excessive deficit has been corrected, carry out the envisaged adjustment towards the MTO, backing it up with reinforced measures if necessary; and ensure that the debt-to-GDP ratio is reduced accordingly;(iii) pursue the ongoing reform of public administration; continue strengthening the budgetary framework, including the assessment and control of budgetary execution at all levels of the general government, notably in order to attain the planned expenditure containment;(iv) in view of the level of debt and the projected increase in age-related expenditure, improve the long-term sustainability of public finances by achieving the MTO and by securing and possibly enhancing the benefits of the adopted pension reforms.Comparison of key macroeconomic and budgetary projections2005 | 2006 | 2007 | 2008 | 2009 | 2010 |Real GDP (% change) | SP Dec 2006 | 0.4 | 1.4 | 1.8 | 2.4 | 3.0 | 3.0 |COM Nov 2006 | 0.4 | 1.2 | 1.5 | 1.7 | n.a. | n.a. |SP Dec 2005 | 0.5 | 1.1 | 1.8 | 2.4 | 3.0 | n.a. |HICP inflation (%) | SP Dec 20066 | 2.5 | 3.2 | 2.2 | 2.2 | 2.1 | 2.1 |COM Nov 2006 | 2.1 | 2.9 | 2.2 | 2.1 | n.a. | n.a. |SP Dec 20056 | 2.3 | 2.3 | 2.2 | 2.2 | 2.1 | n.a. |Output gap (% of potential GDP) | SP Dec 20061 | -2.5 | -2.6 | -2.4 | -1.8 | -0.7 | 0.2 |COM Nov 20065 | -2.0 | -2.0 | -1.8 | -1.5 | n.a. | n.a. |SP Dec 20051 | -2.3 | -2.7 | -2.5 | -1.8 | -0.7 | n.a. |General government balance (% of GDP) | SP Dec 2006 | -6.0 | -4.6 | -3.7 | -2.6 | -1.5 | -0.4 |COM Nov 2006 | -6.0 | -4.6 | -4.0 | -3.9 | n.a. | n.a. |SP Dec 2005 | -6.0 | -4.6 | -3.7 | -2.6 | -1.5 | n.a. |Primary balance (% of GDP) | SP Dec 2006 | -3.3 | -1.7 | -0.7 | 0.4 | 1.5 | 2.5 |COM Nov 2006 | -3.3 | -1.7 | -1.0 | -0.7 | n.a. | n.a. |SP Dec 2005 | -3.2 | -1.7 | -0.6 | 0.6 | 1.5 | n.a. |Cyclically-adjusted balance (% of GDP) | SP Dec 20061 | -4.9 | -3.4 | -2.6 | -1.8 | -1.2 | -0.5 |COM Nov 2006 | -5.1 | -3.7 | -3.2 | -3.2 | n.a. | n.a. |SP Dec 20051 | -5.0 | -3.4 | -2.6 | -1.8 | -1.2 | n.a. |Structural balance2 (% of GDP) | SP Dec 20063 | -4.9 | -3.4 | -2.6 | -1.8 | -1.2 | -0.5 |COM Nov 20064 | -5.1 | -3.7 | -3.2 | -3.2 | n.a. | n.a. |SP Dec 2005 | -5.0 | -3.4 | -2.6 | -1.8 | -1.2 | n.a. |Government gross debt (% of GDP) | SP Dec 2006 | 64.0 | 67.4 | 68.0 | 67.3 | 65.2 | 62.2 |COM Nov 2006 | 64.0 | 67.4 | 69.4 | 70.7 | n.a. | n.a. |SP Dec 2005 | 65.5 | 68.7 | 69.3 | 68.4 | 66.2 | 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 1.2% in the period 2005-2007 and 1.4% in 2008. |6 Private consumption deflator. |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 HICP inflation and compensation of government employees are not provided.[7] The programme rather presents five sections: Executive Summary; Macroeconomic and Budgetary Situation; Macroeconomic and Budgetary Forecasts; Long-term Sustainability of Public Finances; and Institutions, Processes and Budgetary Rules.


Avis juridique important

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31982K1518

Commission Recommendation No 1518/82/ECSC of 11 June 1982 amending Recommendation No 1835/81/ECSC on the obligation to publish price lists and conditions of sale and on prohibited practices in the steel trade

Official Journal L 169 , 16/06/1982 P. 0005 - 0006 Spanish special edition: Chapter 08 Volume 2 P. 0101  Portuguese special edition Chapter 08 Volume 2 P. 0101

*****COMMISSION  RECOMMENDATION No 1518/82/ECSC  of 11 June 1982  amending recommendation No 1835/81/ECSC on the obligation to publish price lists and conditions of sale and on prohibited practices in the steel trade  THE COMMISSION OF THE EUROPEAN  COMMUNITIES,  Having regard to the Treaty establishing the European Coal and Steel Community, and in particular Article 63 (3) and the first and second paragraphs of Article 95 thereof,  Whereas Commission recommendation No 1835/81/ECSC (1), has obliged the Member States to take all measures necessary to ensure that steel distributive undertakings observe rules governing prices and conditions of sale similar to those that apply to production undertakings pursuant to Article 60 of the Treaty and its implementing Decisions; whereas the Member States must bring into force the measures necessary to achieve the goals set out in that recommendation with effect from 1 July 1982;  Whereas, by its Decision No 1836/81/ECSC (2), the Commission itself required steel distributive undertakings to comply with the said rules until 30 June 1982 in an effort to influence prices throughout the steel market immediately; whereas implementation of this Decision has improved the prospects of an increase in steel prices;  Whereas implementation of Decision No 1836/81/ECSC has shown that certain details needed to be added and certain amendments made to the obligations imposed on distributive undertakings pursuant to recommendation No 1835/81/ECSC;  Whereas, by virtue of the minimum of 12 000 tonnes per annum referred to in the second indent of Article 2 (1) of recommendation No 1835/81/ECSC, steel dealers in the various Community markets are not subjected in the same way to the obligations under that recommendation, with the result that there are discrepancies between Community regions; whereas, furthermore, during the fourth quarter of 1981 a number of steel dealers, whose sales fell below this limit, increased their share of the market considerably to the detriment of dealers who resold more than 12 000 tonnes; whereas the provisions adopted by the Commission must not have the effect of transferring activity in this way; whereas the limit of 12 000 tonnes per annum should therefore be reduced; whereas, in view of the high prices of special steels and the fact that they are normally resold in smaller quantities, a specific annual resale tonnage limit should be laid down for dealers who sell only these products;  Whereas the wording of the first indent of Article 2 (1) of recommendation No 1835/81/ECSC is ambiguous and therefore needs to be clarified and made more specific;  Whereas, like undertakings, dealers can be exempted from the obligation to publish price lists and conditions of sale in respect of certain types of steel or products in cases where, because of incomparability, publication of price lists is of no practical value, or where there is only a limited number of buyers and sellers of such steels and products and market transparency is obtained even without publication, or where such steels and products are in direct competition with other products not covered by the ECSC Treaty;  Whereas the Commission has renewed for 1982 the arrangements which it has concluded since 1978 with a number of third countries; whereas, for the reasons given in Decision No 527/78/ECSC (3), as last amended by Decision No 957/82/ECSC (4), it has prohibited steelmakers from aligning their prices on those of these third countries;  Whereas, for the same reasons and in view of the unity of the Community steel market in which dealers play a considerable part, alignment prohibitions must apply equally to distributive undertakings; whereas there appears to be a need for this prohibition if the objectives of the Treaty, as defined in Article 3 thereof, are to be achieved in the operation of the common steel market; whereas the Treaty makes no provision in this respect; whereas the first paragraph of Article 95 must therefore be brought into play;  Whereas, with regard to the penalties imposed on distributive undertakings contravening the obligations provided for by recommendation No 1835/81/ECSC, it is sufficient, in order to achieve the objectives of that recommendation, to oblige Member States to make provision for suitable penalties; whereas, if it is to be aware of the current situation in the steel trade, the Commission must be informed periodically about the implementation by the Member States of the provisions taken in this respect;  Whereas, because of the unforeseen amendments to recommendation No 1835/81/ECSC which will create difficulties for the Member States when they are preparing to implement it, the date at which they must implement the recommendation must be deferred; whereas, for the same reasons, the period within which the Member States must inform the Commission of the provisions taken to implement the recommendation must be extended;  After consulting the Consultative Committee and with the assent of the Council acting unanimously in respect of the prohibition on alignment,  HAS ADOPTED THIS RECOMMENDATION:  Article 1  Recommendation No 1835/81/ECSC is hereby amended as follows:  1. Article 1 is replaced by the following:  'Article 1  The Member States shall, from 1 January 1983 to 30 June 1984, put into effect measures to ensure that the steel distributive undertakings referred to in Article 2 are subject to the obligations under this recommendation and to secure observance of these obligations by means of appropriate inspection measures and fines.  The Member States shall inform the Commission of the measures they have taken not later than 1 October 1982.'  2. The first two indents of Article 2 (1) are replaced by the following:  '- they obtain the steel in total or in part either directly from Community steelmakers, or from third countries,  and  - their steel resale figures, combined, where appropriate, with the steel resale figures of their parent and/or subsidiary companies and branches, involve a minimum of 3 000 tonnes per year of special steels or 6 000 tonnes per year of all steels, based on the figures for the last financial year,'.  3. The following paragraph 4 is hereby added to Article 2:  '4. Non-alloy steels and alloy steels defined as special steels in sections 5.2.3 and 5.3.3 of Euronorm 20-74 shall be considered as "special steels" within the meaning of this recommendation.'  4. The existing text of Article 8 hereby becomes paragraph 1 of that Article and the following paragraph 2 is added:  '2. Steel dealers need not publish price lists in respect of steel products for which steelmakers are not required to publish price lists and conditions of sale pursuant to Decisions No 31-53 (1) and No 37-54 (2), as last amended by Decision 72/441/ECSC (3) and Decision No 21-63 (4) respectively.  (1) OJ of the ECSC, 4. 5. 1953, p. 111.  (2) OJ of the ECSC, 1. 8. 1954, p. 470.  (3) OJ No L 297, 30. 12. 1972, p. 42.  (4) OJ No 187, 24. 12. 1963, p. 2973/63.'  5. The following paragraph 5 is added to Article 13:  '5. Steel dealers must observe the prohibitions, which apply to Community undertakings, concerning alignment of their prices on quotations from third countries, in the same way as those currently imposed pursuant to Decision No 527/78/ECSC.'  6. Article 16 is hereby replaced by the following:  'Article 16  The Member States shall be obliged to inform the Commission periodically, and at least once each quarter, about checks carried out, any irregularities found and any penalties imposed.'  Article 2  This recommendation shall be notified to the Member States and published in the Official Journal of the European Communities.  Done at Brussels, 11 June 1982.  For the Commission  Étienne DAVIGNON  Vice-President  (1) OJ No L 184, 4. 7. 1981, p. 9.  (2) OJ No L 184, 4. 7. 1981, p. 13.  (3) OJ No L 73, 15. 3. 1978, p. 16.  (4) OJ No L 114, 28. 4. 1982, p. 5.


title: 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 Austria, 2006-2010

text:
Important legal notice

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52007SC0723

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 Austria, 2006-2010  /* SEC/2007/0723 final */

	[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |Brussels, 30.5.2007SEC(2007) 723 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 Austria, 2006-2010(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 Austria was submitted in November 1998. In accordance with the Regulation, the Council delivered an opinion on it on 18 January 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 Austria, submitted on 29 March 2007, 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 September 2006 national reform programme.2.1. Recent economic and budgetary performanceIn the last decade, Austrian economic performance was characterised by steady growth slightly above the euro area average and the absence of major distortions. Real GDP growth, largely driven by exports, slowed down substantially in the period 2001-2003, as a reflection of the global and in particular euro-area economic weakening. Thanks to its geographical position, Austria was able to reap substantial benefits from increasing ties with Central and Eastern Europe and particularly from the EU accession of its neighbouring countries. The country has enjoyed one of the lowest unemployment and inflation rates in the euro-area. Due to its long-established consensus-orientated and highly centralised wage setting policy, Austria managed to lower its unit labour costs faster than the euro-area members on average, which greatly enhanced the country's competitive position.In terms of public finances, Austria experienced some substantial consolidation efforts in the last ten years, reducing the high general government budget deficit from the mid-1990s, leading to a balanced position in 2001 but relapsing into a small deficit in the years after. Significant reforms in public administration, pension and health care aimed at reducing the general government deficit have been implemented, but there still remains room for improvement in these areas.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 welcomed "the ambitious structural adjustment planned over the programme period" but invited Austria "to make sure that the programme’s MTO is achieved by the end of the update period by further specifying and implementing the necessary measures that will support the budgetary consolidation planned for the two final years of the programme".2.3. The Commission assessment of the September 2006 national reform programmeThe implementation report of the national reform programme of Austria, provided for in the context of the renewed Lisbon strategy for growth and jobs, was submitted on 25 September 2006. Austria's national reform programme identifies seven strategic priority areas: public finance sustainability, R&D and innovation, infrastructure, international competitiveness, the environment, labour market, and education and training.The Commission’s assessment of this programme (adopted as part of its December 2006 Annual Progress Report[2]) showed that Austria is making good progress in the implementation of its National Reform Programme, especially in the micro-economic area. Against the background of strengths and weaknesses identified, Austria was recommended to take action in the area of employment, in particular lifelong learning, the tax-benefit system and youth qualification. In addition, it was considered important for Austria, among other things, to achieve the target of a balanced budget in 2008.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’ spring 2007 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 Austria, 2006-2010THE 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 [9 July 2007] the Council examined the updated stability programme of Austria, which covers the period 2006 to 2010. Following the general elections in October 2006, a new government was formed in January 2007, which presented the twin budget for 2007/2008 to Parliament on 29 March 2007. On the same day, the updated stability programme was submitted, two and a half months after the 15 December deadline for Austria in the code of conduct.5.  The macroeconomic scenario underlying the programme envisages that real GDP growth will decelerate from a cyclical peak of 3.1 % in 2006 to 2½ % on average over the rest of the programme period. Assessed against currently available information, this scenario appears to be based on somewhat cautious growth assumptions until 2008, as recent data point to somewhat more robust growth. For the outer years of the programme period, the projection seems plausible, even if the growth rates are slightly higher than the average potential growth rate calculated by the Commission services. The programme’s projections for inflation appear realistic.6.  For 2006, the general government deficit amounted to 1.1 % of GDP, against a target of 1.7 % of GDP set in the previous update of the stability programme. This improvement over the target results from the better-than-expected cyclical developments. Although the revenue-to-GDP ratio fell slightly compared with the previous year, it turned out higher by more than one percentage point over the target. Higher-than-expected GDP growth contributed to the decline in the expenditure ratio compared with the previous year. However, the expenditure ratio increased by more than ½ percentage point over the target, indicating that budgetary execution was not as tight as planned.7.  The main goal of the budgetary strategy is to reach a balanced budget over the cycle, reaping the benefits of administrative reform while reinforcing expenditure in several categories. In comparison with the previous update, the latter is reflected in the postponement of the budgetary consolidation to the outer years of the programme period. The update projects the general government position to improve from a deficit of 1.1 % of GDP in 2006 to a surplus of 0.4 % in 2010. The consolidation, which is back-loaded to the last two years of the programme period, is planned to be expenditure-based, with restraint in social spending and the gradual phasing-out of some specific expenditure being the main factors. Compared with the previous programme, the new update backloads further the planned adjustment against a broadly more favourable macroeconomic scenario.8.  The postponement of the budgetary adjustment is reflected also in the structural balance (i.e. the cyclically-adjusted balance net of one-off and other temporary measures) calculated according to the commonly agreed methodology, which improves only very gradually from a deficit of around 1 % of GDP in 2006 and swings to a slight surplus only by the end of the programme period. According to the programme, the profile of the adjustment is affected by the purchase of military equipment between 2007 and 2009, which, unlike the Commission services' spring forecast, it considers being a deficit-increasing one-off measure. As in the previous update of the stability programme, the medium-term objective (MTO) for the budgetary position presented in the programme is a balanced position in structural terms. However, the programme aims to nearly reach the MTO by 2009 and to surpass it slightly in 2010, rather than to achieve it already in 2008 as in the previous update. As the MTO is more demanding than the minimum benchmark (estimated at a deficit of around 1½ % 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 risks to the budgetary projections in the programme appear broadly balanced for 2007 and 2008, but for 2009 and 2010, the budgetary outcomes could be worse than projected, despite plausible macroeconomic assumptions. Indeed, the expenditure-to-GDP ratio is foreseen to fall significantly in the two final years. The phasing out of specific expenditures, in particular on military equipment, and the expenditure savings on unemployment benefits and on pensions, as a result of the 2004 pension reform, should contribute to the decline in the expenditure ratio in the outer years. On the other hand, additional spending would be made on education, R&D and infrastructure over the programme period, while the expected efficiency gains in public administration remain uncertain. Finally, the programme hints at the possibility of further tax cuts financed by the planned expenditure savings.10.  In view of this risk assessment, the budgetary stance in the programme may not be sufficient to ensure that the MTO is achieved by 2010, as envisaged in the programme. The Commission services' spring forecast estimates the structural deficit to widen in 2007 and 2008. However, a sufficient safety margin against breaching the 3% of GDP deficit threshold with normal macroeconomic fluctuations is maintained throughout the programme period. The pace of the adjustment towards the MTO implied by the programme is insufficient and should be strengthened, especially in 2007 and 2008, to be 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. In particular, only a limited improvement in the structural balance is planned between 2007 and 2009, when Austria is expected to experience good times. This conclusion is confirmed even if one considers the purchase of military equipment to constitute a deficit-increasing one-off measure, as the programme does.11.  Government gross debt is estimated to have declined to 62.2 % of GDP in 2006, still being above the 60 % of GDP Treaty reference value. The programme projects the debt ratio to fall below the reference value by 2008 and to decline further to 56.8 % of GDP by the final year of the programme period. In view of the risk assessment, the debt ratio seems to be sufficiently diminishing towards the reference value in the early part of the programme period and is planned to approach it by 2007.12.  The long-term budgetary impact of ageing in Austria is well below the EU average, with pension expenditure projected to decrease as a share of GDP over the long-term, as a consequence of the significant expenditure containment expected from the 2004 pension reform. The initial budgetary position, with a structural primary surplus, contributes to easing the long-term budgetary impact of ageing. Increasing primary surpluses over the medium-term, as announced in the programme, as well as an increase in the employment rate of older workers would contribute towards containing risks to the sustainability of public finances. Overall, Austria appears to be at low risk with regard to the sustainability of public finances.13.  The stability programme does not contain a qualitative assessment of the overall impact of the September 2006 implementation report of the National Reform Programme within the medium-term fiscal strategy. In addition, it provides no systematic information on the direct budgetary costs or savings of the main reforms envisaged in the National Reform Programme and its budgetary projections do not explicitly take into account the public finance implications of the actions outlined in the National Reform Programme. Those measures in the area of public finances that are cited in the stability programme seem consistent with those foreseen in the National Reform Programme. In particular, expected savings from administrative reform and the reinforcement of spending on R&D are put forward in both programmes.14.  The budgetary strategy in the programme is partly consistent with the broad economic policy guidelines included in the integrated guidelines for the period 2005-2008.15.  As regards the data requirements specified in the code of conduct for stability and convergence programmes, the programme provides all required and most of the optional data[6].The overall conclusion is that, in a context of robust growth prospects, the programme envisages slow progress towards the MTO through a relatively back-loaded adjustment that is based mainly on not-fully-specified expenditure restraint. There are risks to the achievement of the budgetary targets after 2008 and the MTO might not be reached by the end of the programme period. Government debt would approach the 60 % of GDP reference value in 2007 and continue to decline in subsequent years.In view of the above assessment, Austria is invited to exploit the good economic conditions and the lower-than-targeted deficit in 2006 to frontload and strengthen the adjustment towards the MTO, in particular by rigorously implementing expenditure restraint and by using any unexpected tax revenues for consolidation.Comparison of key macroeconomic and budgetary projections2005 | 2006 | 2007 | 2008 | 2009 | 2010 |Real GDP (% change) | SP Mar. 2007 | 2.0 | 3.1 | 2.7 | 2.3 | 2.5 | 2.6 |COM May 2007 | 2.0 | 3.1 | 2.9 | 2.5 | n.a. | n.a. |SP Nov. 2005 | 1.7 | 1.8 | 2.4 | 2.5 | n.a. | n.a. |HICP inflation (%) | SP Mar. 2007 | 2.1 | 1.5 | 1.6 | 1.7 | 1.7 | 1.8 |COM May 2007 | 2.1 | 1.7 | 1.8 | 1.7 | n.a. | n.a. |SP Nov. 2005 | 2.3 | 2.1 | 1.7 | 1.5 | n.a. | n.a. |Output gap (% of potential GDP) | SP Mar. 20071 | -1.1 | -0.3 | 0.1 | -0.1 | 0.1 | 0.3 |COM May 20075 | -1.1 | -0.2 | 0.5 | 0.8 | n.a. | n.a. |SP Nov. 20051 | -0.7 | -1.1 | -0.9 | -0.5 | n.a. | n.a. |General government balance (% of GDP) | SP Mar. 2007 | -1.6 | -1.1 | -0.9 | -0.7 | -0.2 | 0.4 |COM May 2007 | -1.6 | -1.1 | -0.9 | -0.8 | n.a. | n.a. |SP Nov. 2005 | -1.9 | -1.7 | -0.8 | 0.0 | n.a. | n.a. |Primary balance6 (% of GDP) | SP Mar. 2007 | 1.3 | 1.9 | 2.0 | 2.1 | 2.6 | 3.1 |COM May 2007 | 1.3 | 1.6 | 1.8 | 1.7 | n.a. | n.a. |SP Nov. 2005 | 1.1 | 1.2 | 2.0 | 2.7 | n.a. | n.a. |Cyclically-adjusted balance (% of GDP) | SP Mar. 20071 | -1.1 | -1.0 | -0.9 | -0.7 | -0.2 | 0.2 |COM May 2007 | -1.1 | -1.0 | -1.1 | -1.2 | n.a. | n.a. |SP Nov. 2005 | -1.6 | -1.2 | -0.4 | 0.2 | n.a. | n.a. |Structural balance2 (% of GDP) | SP Mar. 20073 | -1.1 | -1.0 | -0.8 | -0.4 | -0.2 | 0.2 |COM May 20074 | -1.1 | -1.0 | -1.1 | -1.2 | n.a. | n.a. |SP Nov. 2005 | -1.6 | -1.2 | -0.4 | 0.2 | n.a. | n.a. |Government gross debt (% of GDP) | SP Mar. 2007 | 63.5 | 62.2 | 61.2 | 59.9 | 58.5 | 56.8 |COM May 2007 | 63.5 | 62.2 | 60.6 | 59.2 | n.a. | n.a. |SP Nov. 2005 | 63.4 | 63.1 | 61.6 | 59.5 | n.a. | n.a. |Notes: |1 Commission services calculations on the basis of the information in the programme with potential growth estimated at 2.3%, 2.3%, 2.4%, 2.4% and 2.3% respectively in the period 2006-2010. |2 Cyclically-adjusted balance (as in the previous rows) excluding one-off and other temporary measures. |3 Deficit-increasing one-off and other temporary measures taken from the programme (purchase of military aircraft of 0.2% of GDP in 2007, 0.4% in 2008 and 0.1% in 2009). |4 Compared with the programme (see note 3), the Commission services’ spring 2007 forecast does not consider the purchase of military aircraft as one-offs, since it spreads over several years and does not substantially increase total government expenditure. |5 Based on estimated potential growth of 2.3%, 2.0%, 2.2% and 2.2% respectively in the period 2005-2008. |6 Data on the primary balance in the programme and in the Commission services' forecasts are not directly comparable because of a different treatment of FISIM. Data in the programme follow the definitions required by the code of conduct. To be comparable with data in the programme, Commission data on the primary balance need to be adjusted by around 0.1-0.2% of GDP. |Source: |Stability programme (SP); Commission services’ spring 2007 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://ec.europa.eu/economiy_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] However, optional data on employment and hours worked as well as public sector wages are not provided.