18. Stability and Convergence Programmes
| (24560)
9276/03
—
| Council Opinion on the updated stability programme of Austria.
|
| Legal base | Article 99(4) EC; QMV
|
| Document originated | 13 May 2003
|
| Deposited in Parliament | 28 May 2003
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| Department | HM Treasury |
| Basis of consideration | EM of 9 June 2003
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| Previous Committee Report | None; but see (24214) 5317/03: HC 63-xxi (2002-03), paragraph 14 (14 May 2003)
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| To be discussed in Council | Already adopted
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
18.1 The Council of Economic and Finance Ministers (ECOFIN) issues
an Opinion on the stability and convergence programme (SCP) of
each Member State.[39]
These Opinions, which are not binding on Member States, are based
on a recommendation from the Commission. The economic content
of the programmes is assessed with reference to the Commission's
Autumn 2002 economic forecasts. If a Member State's programme
is found wanting, it may be invited by ECOFIN, in a Recommendation,
to make adjustments to its economic policies, though such Recommendations
are likewise not binding on Member States.
18.2 We reported on the updates of the stability and convergence
programmes of all the Member States except Austria and the Netherlands
in May 2003.[40]
The document
18.3 The document gives the Council's Opinion on the SCP of Austria.
A summary of the Council's comments is provided by the Paymaster
General (Dawn Primarolo) in her helpful Explanatory Memorandum,
as follows:
"The Council Opinion notes that the update complies only
partly with the requirements of the code of conduct as it was
submitted late. The Opinion notes that in 2002 government finances
weakened noticeably. It also highlights that the general government
deficit is projected to widen from 0.6% in 2002 to 1.3% in 2003,
mainly due to deferred payments for flood damage and a widening
output gap. The deficit is then projected to fall in 2004, but
rise again in 2005 before falling to 0.4% of GDP in 2007. The
Opinion notes the debt ratio increased substantially in 2001/2002
(to 67.9%), mostly due to a reclassification in the Austrian gross
debt reporting. It also notes with concern that the goal of bringing
gross consolidated debt below 60% of GDP has now been significantly
delayed. The Opinion notes that on the basis of current policies,
the risk of unsustainable public finances in light of ageing populations
cannot be excluded. In this context, the Opinion welcomes the
plans for fundamental pension reform to tackle financial and economic
pressures from population ageing. The Opinion considers that the
envisaged path of government finances is only partly in line with
the requirements of the Stability and Growth Pact, because the
cyclically adjusted deficit stays close to balance only in the
years 2004 and 2007."
The Government's view
18.4 The Minister tells us:
"The Council adopts Opinions [and Recommendations] based
on the budgetary plans of national governments as set out in their
updated Stability and Convergence Programmes. The Opinions set
out the Council's views on policy priorities for the coming years
with reference to the Stability and Growth Pact, and growth prospects
in general. Under Article 249 of the Treaty, Opinions shall have
no binding force.
"The Government has consistently stated that the UK supports
a prudent interpretation of the Stability and Growth Pact, which
takes into account the economic cycle, sustainability and the
important role of public investment."
Conclusion
18.5 The document and the Minister's summary give a useful
overview of the prospects for the economy of Austria. We normally
report these documents as relevant to the debate on the annual
Broad Economic Policy Guidelines. But as we noted in our Report
on the bulk of these opinions,[41]
the opinions for Austria and the Netherlands were late. That
debate took place on 11 June 2003,[42]
so we now clear this document without further comment.
39 The twelve Member States that have adopted the euro
have stability programmes, whereas the other three Member States
(UK, Denmark and Sweden) produce convergence programmes. Back
40
See headnote. Back
41
See headnote. Back
42
Official Report, European Standing Committee B, 11 June 2003,
cols 3-16. Back
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