Updated convergence programme of the United Kingdom, 2005/2006-2010/2011 - Main contents
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official title
Council Opinion of 14 March 2006 on the updated convergence programme of the United Kingdom, 2005/2006-2010/2011| Legal instrument | Opinion |
|---|---|
| Original proposal | SEC(2006)233 |
| CELEX number i | 32006A0405(13) |
| Document | 14-03-2006 |
|---|---|
| Publication in Official Journal | 05-04-2006; OJ C 82 p. 52-56 |
| Effect | 14-03-2006; Entry into force Date of document |
| End of validity | 31-12-9999 |
5.4.2006 |
EN |
Official Journal of the European Union |
C 82/52 |
COUNCIL OPINION
of 14 March 2006
on the updated convergence programme of the United Kingdom, 2005/2006-2010/2011
(2006/C 82/13)
THE 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 (1), and in particular Article 9(3) thereof,
Having regard to the recommendation of the Commission,
After consulting the Economic and Financial Committee,
HAS DELIVERED THIS OPINION:
(1) |
On 14 March 2006 the Council examined the updated convergence programme of the United Kingdom, covering the period 2005/06 to 2010/11. |
(2) |
Over the last decade, the United Kingdom macroeconomic performance has been impressive in terms of improved stability, growth, low inflation and labour market outturns. Annual real GDP growth averaged 3,25 % in 1996-2000 and 2,25 % in 2001-05. However, after a period of fiscal consolidation between 1996 and 2001, when the general government balance moved from a deficit of around 5 % of GDP to a comfortable surplus, the United Kingdom has implemented a planned large increase of public expenditure including public investment, with the general government balance changing to a deficit of over 3 % of GDP by 2004. Gross debt declined from over 50 % of GDP in 1996 to below 38 % of GDP in 2002, but has been on a slowly growing path since then. |
(3) |
In its opinion of 8 March 2005 on the previous update of the convergence programme, the Council invited the United Kingdom to ensure that the deficit was below 3 % of GDP and to improve the cyclically-adjusted position to ensure that a budgetary position close to balance or in surplus was achieved over the medium term. On 24 January 2006, taking into consideration the information contained in the 2005 update of the convergence programme, the Council decided that the United Kingdom deficit was excessive. According to the Council recommendation under Article 104(7) of the same date, the excessive deficit should be corrected by financial year 2006/07 (2). Following the expiry of the six-month period foreseen by the recommendation, the Commission is due to carry out an assessment of the progress made by the United Kingdom authorities towards the correction of the excessive deficit. |
(4) |
As regards budgetary implementation in 2005/06, the general government deficit is estimated at 3,4 % of GDP in the Commission services' autumn 2005 forecast, against a projection of 2,8 % of GDP set in the previous update of the convergence programme. The higher than expected deficit is due to lower than expected GDP growth, now estimated at 1,75 % compared to 3 % in the previous update, to base effects stemming from lower than expected outturns for tax receipts in 2004/05 and, to a lesser extent, to some slight discretionary easing. |
(5) |
The programme broadly follows the model structure, but deviates on some material points from the data provision requirements for stability and convergence programmes specified in the new code of conduct (3). |
(6) |
The macroeconomic scenario underlying the budgetary projections envisages real GDP growth to pick up from 1,75 % in 2005/06 to 3 % in 2007/08, and then to dip to 2,75 % in 2008/09 and 2,25 % thereafter. Assessed against currently available information, this scenario appears to be based on broadly plausible growth assumptions with a margin of caution toward the end of the projection horizon. The programme's projections for inflation appear realistic. |
(7) |
The updated programme projects a reduction in the deficit from just above 3 % of GDP in financial year 2005/06 to below... |
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