19 Eurozone economic governance: draft
budgetary plans
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Commission Opinion of 15.11.2013 on the Draft Budgetary Plan of Belgium
Commission Opinion of 15.11.2013 on the Draft Budgetary Plan of Finland
Commission Opinion of 15.11.2013 on the Draft Budgetary Plan of Slovakia
Commission Opinion of 15.11.2013 on the Draft Budgetary Plan of Estonia
Commission Opinion of 15.11.2013 on the Draft Budgetary Plan of Luxembourg
Commission Opinion of 15.11.2013 on the Draft Budgetary Plan of Germany
Commission Opinion of 15.11.2013 on the Draft Budgetary Plan of Austria
Commission Opinion of 15.11.2013 on the Draft Budgetary Plan of Italy
Commission Opinion of 15.11.2013 on the Draft Budgetary Plan of Slovenia
Commission Opinion of 15.11.2013 on the Draft Budgetary Plan of the Netherlands
Commission Opinion of 15.11.2013 on the Draft Budgetary Plan of Malta
Commission Opinion of 15.11.2013 on the Draft Budgetary Plan of France
Commission Opinion of 15.11.2013 on the Draft Budgetary Plan of Spain
Commission Communication: 2014 draft budgetary plans of the euro area: Overall assessment of the budgetary situation and prospects
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| Legal base | Articles 121(6) and 136 TFEU; —; —
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| Documents originated | 15 November 2013
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| Deposited in Parliament | (a)-(m) 26 November 2013
(n) 10 December 2013
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| Department | HM Treasury
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| Basis of consideration | EM of 11 December 2013
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| Previous Committee Report | None
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| Discussion in Council | Eurogroup 22 November 2013
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
19.1 In May two Regulations, Regulation (EU) No.
472/2013 and Regulation (EU) No. 473/2013, the so-called "Two
Pack", were adopted to strengthen economic governance in
the eurozone. The second Regulation requires most eurozone Member
States to publish by 14 October their draft budgets for the following
year and the Commission to publish Opinions on those draft budgets
by 30 November.[94] (There
is an alternative procedure if the Commission finds serious non-compliance
with Stability and Growth Pact (SGP) requirements in a draft budget.)
The documents
19.2 On 15 November the Commission published its
Opinions, documents (a)-(m), of the draft budgetary plans (DBPs)
presented by 13 Member States with respect to their fiscal targets
under the SGP, on the basis of the Commission's 2013 Autumn Forecast.
Each Opinion is supported by a Commission Staff Working Document.
19.3 At the same time the Commission published its
Communication, document (n), about its Opinions. The document
summarises the Opinions and provides an overall assessment of
the situation in these 13 eurozone Member States, saying that:
· in 2014 public debt is expected to stabilise
and the headline budget balance is expected to be below the reference
value of 3% of GDP;
· the aggregate fiscal effort, defined as
change in the cyclically adjusted balance, would amount to 0.25%
of GDP in 2014;
· further structural reform is needed to
support the foundations of sustained growth; and
· the DBPs do not pay sufficient attention
to the composition of fiscal consolidation — that is, consolidation
should be growth friendly and some focus on expenditure cuts is
necessary.
THE OPINIONS
Belgium
19.4 The Commission says that:
· the DBP is compliant with the rules of
the SGP;
· Belgium is projected to make sufficient
progress towards compliance with the debt criterion; but
· the Autumn Forecast points to a risk that
the structural balance will not show sufficient progress towards
the Belgium medium term objective (MTO) in 2014, although the
structural improvement will be close to the required effort.
Germany
19.5 The Commission says that:
· the DBP is compliant with the rules of
the SGP;
· Germany has, however, made no progress
with regard to the structural part of the fiscal recommendations
issued by the Council in the context of the 2013 European Semester;
and
· Germany is thus invited to accelerate
progress.
Estonia
19.6 The Commission says that:
· The DBP is compliant with the rules of
the SGP;
· Estonia is forecast to remain at its MTO;
and
· Estonia has made some progress with regard
to the structural part of the fiscal progress in the recommendations
issued in the European Semester.
Spain
19.7 The Commission says that:
· there is a risk that the DBP will not
fulfil the requirements in Spain's Excessive Deficit Procedure
(EDP) recommendation;
· this risk arises from somewhat favourable
assumptions for nominal GDP growth and the composition of growth
in the DBP and from a lower structural effort than recommended
by the Council; and
· Spain has made some progress to address
the structural part of the fiscal recommendations issued by the
Council in the context of the European Semester.
France
19.8 The Commission says that:
· The DBP is compliant with the rules of
the SGP, albeit with no margin;
· its forecasts suggest that France will
comply with the 2014 EDP recommendation; and
· France is recommended to implement rigorously
the budget for 2014 and to take a significant set of measures
for 2015 on top of those specified so far.
Italy
19.9 The Commission says that:
· there is a risk that with the DBP the
debt-to-GDP ratio will not fall in line with the debt reduction
benchmark;
· Italy has made limited progress with regard
to the structural part of the fiscal recommendations issued by
the Council in the context of the European Semester and it should
accelerate progress towards their implementation; and
· Italy is invited to ensure that the 2014
budget will be fully compliant with the SGP and to address the
risks identified in the Commission's assessment of the DBP.
Luxembourg
19.10 The Commission says that:
· there is a risk that the DBP will not
fulfil the requirements of the SGP;
· in particular, its forecast points to
non-compliance with respect to the adjustment path towards the
MTO in 2014; and
· Luxembourg is invited to ensure full compliance
with the SGP within the national budgetary process for the 2014
budget.
Malta
19.11 The Commission says that:
· there is a risk that the DBP will not
fulfil the requirements in the EDP recommendation, since while
the headline deficit target is expected to be met in 2013, this
is not the case for the headline deficit in 2014 nor the structural
effort in either 2013 or 2014; and
· Malta is invited to take the necessary
measures within the national budgetary process to ensure that
the 2014 budget will be fully compliant with the SGP.
The Netherlands
19.12 The Commission says that:
· the DBP, with the addenda, is compliant
with the rules of the SGP, albeit with no margin; and
· the Dutch authorities are invited to rigorously
implement the budget and to make further progress towards implementation
of the fiscal recommendations under the European Semester.
Austria
19.13 The Commission says that:
· the DBP is broadly compliant with the
rules of the SGP;
· the current scenario points to some deviation
from the adjustment path towards the MTO in 2014; and
· Austria is invited to ensure full compliance
with the SGP within the national budgetary process for 2014 and
to make further progress towards implementation of the fiscal
recommendations under the European Semester.
Slovenia
19.14 The Commission says that:
· the DBP is compliant with the rules of
the SGP, albeit with no margin;
· Slovenia has made limited progress with
regard to the structural part of the European Semester fiscal
recommendations; and
· Slovenia is invited to approve the necessary
consolidation measures within the national budgetary process to
ensure that the 2014 budget remains fully compliant with the SGP.
Slovakia
19.15 The Commission says that:
· the DBP is broadly compliant with the
rules of the SGP;
· Slovakia is expected to bring government
deficit within the 3% reference threshold in 2013 in line with
the EDP recommendation;
· but the correction of the deficit is not
ensured in 2014, the DBP relies significantly on one-off measures
and Slovakia does not reach the required structural adjustments
towards the MTO in 2014;
· Slovakia is invited to take the necessary
measures within the national budgetary process to ensure that
the 2014 budget will be fully compliant with the SGP.
Finland
19.16 The Commission says that:
· there is a risk that the DBP will not
fulfil the requirements of the SGP, since the Commission forecast
points to non-compliance with respect to the adjustment path towards
the MTO in 2014;
· also, Finland's general government gross
debt will be over the 60% Treaty threshold in 2014 and continue
rising thereafter; and
· Finland is invited to take the necessary
measures within the national budgetary process to ensure that
the 2014 budget will be fully compliant with the SGP and, particularly,
to address the risks identified by the Commission.
The Government's view
19.17 The Economic Secretary to the Treasury (Nicky
Morgan) says that:
· these documents are addressed to the Eurogroup
(and specifically to Belgium, Germany, Estonia, Spain, France,
Italy, Luxembourg, Malta, the Netherlands, Austria, Slovenia,
Slovakia and Finland) and have no policy or budgetary implications
for the UK;
· the Government believes that Member States
should take forward appropriate fiscal consolidation as a priority
to reduce their deficit and to support recovery; and
· the DBPs were discussed on 22 November
2013 by the Eurogroup and Member States' final budgets had to
be adopted domestically by 31 December 2013.
Conclusion
19.18 Whilst clearing these documents, we draw
them to the attention of the House as illustrative of how the
newly enhanced system of economic governance is operating for
eurozone Member States.
94 The exception is those eurozone Member States subject
to a Macroeconomic Adjustment Programme under the first "Two
Pack" Regulation. Back
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