Regulation 2011/1173 - Effective enforcement of budgetary surveillance in the euro area - Main contents

Summary of Legislation
Legislative text

1. Summary of Legislation

Stability and Growth Pact enforcement

SUMMARY OF:

Regulation (EU) No 1173/2011 — the effective enforcement of budgetary surveillance in the euro area

WHAT IS THE AIM OF THE REGULATION?

It sets out a gradual system of sanctions for euro area countries that either fail to comply with the Stability and Growth Pact or manipulate their economic statistics.

The rules are mainly designed to encouragegovernments to stick to their medium-term budgetary goals.

KEY POINTS

Euro area countries which:

-

fail to act toto correct a significant deviation of their structural budget deficit from what is required to achieve their medium-term objective, following a warning from the European Commission, may have to lodge with the Commission an interest-bearing deposit equivalent to 0.2% of their previous year’s gross domestic product (GDP);
-

are deemed to be in excessive deficit by the Council, may have to lodge with the Commission a non-interestbearing deposit equivalent to 0.2% of their previous year’s GDP;
-

do not act effectivelyto correct an excessive deficit, may be fined 0.2% of their previous year’s GDP.

The procedures for adopting the abovementioned sanctions are identical. Following a Council decision about the lack of effective action or establishing the existence of an excessive deficit, the Commission proposes the relevant sanction within 20 days. This is adopted unless a qualified majority of euro area countries rejects it. The Commission may recommend the Council reduce or cancel the sanction in the light of exceptional economic circumstances or following the reasoned request by the country concerned.

The Council, following a recommendation from the Commission, may also fine a euro area country up to 0.2% of its GDP if it intentionally, or by serious negligence, misrepresents its deficit and debt data.

Income generated from fines and non-interest-bearing deposits is transferred to the European Stability Mechanism to help euro area members requiring financial assistance.

The Commission, publishes a report every 5 years, starting from 14 December 2014, evaluating the:

-

effectiveness of this regulation in tackling potential risks to the proper functioning of the monetary union;
-

progress made in ensuring closer coordination and convergence of national economic policies and performance.

FROM WHEN DOES THE REGULATION APPLY?

It applies from 13 December 2011.

BACKGROUND

The regulation is one of 6 pieces of legislation (known as the Six-pack) designed to strengthen economic governance in the EU, and more specifically, in the euro area. The others are:

-

a regulation amending Regulation (EC) No 1466/97 on the surveillance of national budgets and economic policies;
-

a regulation amending Regulation (EC) No 1467/97 on the EU’s excessive deficit procedure;
-

a regulation on the prevention and correction of macroeconomic imbalances;
-

a regulation on enforcement measures to correct excessive macroeconomic imbalances in the euro area; and
-

a directive on requirements for national budgets of euro countries.

For more information, see:

-

EU economic governance ‘Six-Pack’ enters into force — press release (European Commission).

MAIN DOCUMENT

Regulation (EU) No 1173/2011 of the European Parliament and of the Council of 16 November 2011 on the effective enforcement of budgetary surveillance in the euro area (OJ L 306, 23.11.2011, pp. 1-7)

2. Legislative text

Regulation (EU) No 1173/2011 of the European Parliament and of the Council of 16 November 2011 on the effective enforcement of budgetary surveillance in the euro area

Contents

1.

Summary of Legislation

2.

Legislative text