Recommendation 2015/1029 - Bringing an end to the situation of an excessive government deficit in the United Kingdom - Main contents

EN

Official Journal of the European Union

L 163/55

According to Article 126 of the Treaty on the Functioning of the European Union (TFEU) Member States are to avoid excessive government deficits.

Pursuant to paragraph 4 of the Protocol (No 15) on certain provisions relating to the United Kingdom of Great Britain and Northern Ireland annexed to the Treaty on European Union and to the TFEU, the obligation in Article 126(1) of the TFEU to avoid excessive general government deficits does not apply to the UK unless it adopts the euro. Paragraph 5 of that Protocol provides that the UK is to endeavour to avoid an excessive government deficit.

The Stability and Growth Pact 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.

On 8 July 2008 the Council decided, in accordance with Article 104(6) of the Treaty establishing the European Community (TEC), that an excessive deficit existed in the UK and issued a recommendation to correct the excessive deficit by financial year 2009-2010 at the latest, in accordance with Article 104(7) of the TEC and Article 3 of Council Regulation (EC) No 1467/97 (1)  (2).

In accordance with Article 104(8) of the TEC, the Council decided on 27 April 2009 that the UK had not taken action in response to the Council recommendation of 8 July 2008 (3). On 2 December 2009, the Council issued a revised recommendation under Article 126(7) of the TFEU recommending that the UK put an end to the excessive deficit situation by 2014-2015. On 6 July 2010, the Commission concluded that based on the Commission's 2010 spring forecast, the UK had taken effective action in compliance with the Council recommendation of 2 December 2009 and considered that no additional step in the excessive deficit procedure was therefore necessary at that point in time.

On 19 June 2015, in accordance with Article 126(8) of the TFEU, the Council established that the UK had not taken effective action in the period 2010-2011 to 2014-2015 in response to the Council recommendation of 2 December 2009.

In accordance with Article 126(7) of the TFEU and Article 3 of Regulation (EC) No 1467/97, the Council is required to make recommendations to the Member State concerned with a view to bringing the situation of an excessive deficit to an end within a given period. The recommendation is to establish a maximum deadline of six months for effective action to be taken by the Member State concerned to correct the excessive deficit. Furthermore, in a recommendation to correct an excessive deficit, the Council is to request the achievement of annual budgetary targets which, on the basis of the forecast underpinning the recommendation, are consistent with a minimum annual improvement in the structural balance, i.e. the cyclically adjusted balance excluding one-off and other temporary measures, of at least 0,5 % of GDP as a benchmark.

The Commission's updated 2015 spring forecast (4) projects an increase in real GDP of 2,4 % in 2015-2016 and 2,1 % in 2016-2017, following growth of 2,8 % in 2014-2015 (5). The main contributions to growth in both years stem from domestic demand. Private consumption is expected to pick up gradually over the forecast horizon as nominal wage growth...