Updated convergence programme of United Kingdom, 2006/07-2011/12

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Contents

  1. Current status
  2. Key information
  3. Key dates
  4. Legislative text
  5. Original proposal
  6. Sources and disclaimer
  7. Full version
  8. EU Monitor

1.

Current status

This opinion has been published on March 29, 2007.

2.

Key information

official title

Council opinion of 27 February 2007 on the updated convergence programme of United Kingdom, 2006/07-2011/12
 
Legal instrument Opinion
Original proposal SEC(2007)191 EN
CELEX number29 32007A0329(06)

3.

Key dates

Document 27-02-2007
Publication in Official Journal 29-03-2007; OJ C 72 p. 20-23
End of validity 31-12-9999

4.

Legislative text

29.3.2007   

EN

Official Journal of the European Union

C 72/20

 

COUNCIL OPINION

of 27 February 2007

on the updated convergence programme of United Kingdom, 2006/07-2011/12

(2007/C 72/06)

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 27 February 2007 the Council examined the updated convergence programme of the United Kingdom, which covers the period from financial year 2006/07 to financial year 2011/12 (2).

 

(2)

The programme contains two macroeconomic scenarios: a central scenario and an alternative scenario which is based on trend growth a quarter percentage point lower than in the central scenario. The projections for the public finances in the update of the convergence programme are based on the latter scenario, which is designed to be more cautious than the central scenario and is considered the reference scenario for this assessment. It envisages real GDP growth of 2

% in 2006 and 2007, easing to 2

Formula

% on average over the rest of the programme period. Based on currently available information, the programme appears to be based on plausible growth assumptions. The projections for inflation, which is expected to decline from 2

Formula

% in 2006 to 2 % from 2007 onwards, appear to be on the low side in the short term, in the light of more recently published outturns, but otherwise plausible.

 

(3)

For 2006/07, the general government deficit is estimated at 3,0 % of GDP in the Commission services' autumn 2006 forecast. The current update of the convergence programme estimates a deficit of 2,8 % of GDP for the same year, which implies recent trends, showing robust growth in revenues and slower growth in expenditure, being maintained in the remaining months of the financial year.

 

(4)

The key objectives for fiscal policy as identified in the convergence programme update are to ensure long-term sustainability, intra- and intergenerational fairness and, subject to this, to support monetary policy, in particular by allowing the automatic stabilisers to smooth the path of the economy. The programme projects a reduction of the deficit below 3 % of GDP by 2006/07 (2,8 %) and to 1,4 % of GDP by the end of the projection period in 2011/12. The primary balance, estimated as a deficit of 0,6 % of GDP in 2005/06, is expected to return to balance by 2008/09 and to reach a surplus of 0,7 % of GDP by 2011/12. The budgetary adjustment over the projection period is equally distributed between revenues and expenditure. The increase of the revenue ratio is expected to take place in the first two years of the projection period, partly driven by discretionary measures, while significant adjustment on the expenditure side is planned to take place from 2008/09, through a moderation in current expenditure growth. Public investment in the definition used in the convergence programme (3) is planned to stabilise at 2

Formula

% of GDP from 2006/07 so that from 2007/08 the deficit is projected to be used entirely to fund public investment. The adjustment path is broadly in line with the one projected in the 2005 update, against a more favourable macroeconomic outlook in the short term.

 

(5)

Calculated according to the commonly agreed methodology, the structural balance (i.e. the cyclically-adjusted balance net of one-off and other temporary measures) is projected to improve from 2

Formula

% of GDP in 2006/07 to about 1

Formula

% of GDP in the final programme year, 2011/12. On the basis of these estimates, this...


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This text has been adopted from EUR-Lex.

5.

Original proposal

  • SEC(2007)191 - Recommendation for a Council opinion in accordance with the third paragraph of Article 9 of Council Regulation 1466/97 on the updated convergence programme of United Kingdom, 2006/2007-2011/2012
 

6.

Sources and disclaimer

For further information you may want to consult the following sources that have been used to compile this dossier:
  • dossier EUR-Lex decision30

This dossier is compiled each night drawing from aforementioned sources through automated processes. We have invested a great deal in optimising the programming underlying these processes. However, we cannot guarantee the sources we draw our information from nor the resulting dossier are without fault.

 

7.

Full version

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8.

EU Monitor

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  • 1. 
    OJ L 209, 2.8.1997, p. 1. Regulation as amended by Regulation (EC) No 1055/2005 (OJ L 174, 7.7.2005, p. 1). All the documents referred to in this text can be found at the following website:

     
  • 2. 
    OJ L 209, 2.8.1997, p. 1. Regulation as amended by Regulation (EC) No 1055/2005 (OJ L 174, 7.7.2005, p. 1). The documents referred to in this text can be found at the following website:

     
  • 3. 
    The UK financial year runs from April to March.

     
  • 4. 
    The UK financial year runs from April to March.

     
  • 5. 
    The UK financial year runs from April to March.

     
  • 6. 
    Communication from the Commission to the Spring European Council,
     
  • 7. 
    OJ L 209, 2.8.1997, p. 1. Regulation as amended by Regulation (EC) No 1055/2005 (OJ L 174, 7.7.2005, p. 1). All the documents referred to in this text can be found at the following website:

     
  • 8. 
    OJ L 209, 2.8.1997, p. 1. Regulation as amended by Regulation (EC) No 1055/2005 (OJ L 174, 7.7.2005, p. 1). All the documents referred to in this text can be found at the following website:

     
  • 9. 
    Communication from the Commission to the Council and the European Parliament,
     
  • 10. 
    OJ L 209, 2.8.1997, p. 1. Regulation as amended by Regulation (EC) No 1055/2005 (OJ L 174, 7.7.2005, p. 1). The documents referred to in this text can be found at the following website:

     
  • 11. 
    Communication from the Commission to the Spring European Council,
     
  • 12. 
    The UK financial year runs from April to March.

     
  • 13. 
    The definition of public investment in the UK convergence programme, which is not an ESA concept, covers all public sector investment (that is, public corporations as well as general government) and includes capital grants to the private sector net of depreciation.

     
  • 14. 
    In particular, the data on projections for employment, unemployment, wage inflation and a detailed breakdown of revenue and expenditure projections on a general government basis after 2007/08 are not provided. Compared to the 2005 update, the horizon for the breakdown of expenditure on a general government basis is shorter in the current update, which is the last update before new detailed spending plans will be fixed in the July 2007 Comprehensive Spending Review.

     
  • 15. 
    OJ L 209, 2.8.1997, p. 1. Regulation as amended by Regulation (EC) No 1055/2005 (OJ L 174, 7.7.2005, p.

    1). All the documents referred to in this text can be found at the following website:

     
  • 16. 
    OJ L 209, 2.8.1997, p. 1. Regulation as amended by Regulation (EC) No 1055/2005 (OJ L 174, 7.7.2005, p.

    1). The documents referred to in this text can be found at the following website:

     
  • 17. 
    The UK financial year runs from April to March.

     
  • 18. 
    The UK financial year runs from April to March.

     
  • 19. 
    The UK financial year runs from April to March.

     
  • 20. 
    Communication from the Commission to the Spring European Council,
     
  • 21. 
    OJ L 209, 2.8.1997, p. 1. Regulation as amended by Regulation (EC) No 1055/2005 (OJ L 174, 7.7.2005, p.

    1). All the documents referred to in this text can be found at the following website:

     
  • 22. 
    OJ L 209, 2.8.1997, p. 1. Regulation as amended by Regulation (EC) No 1055/2005 (OJ L 174, 7.7.2005, p.

    1). All the documents referred to in this text can be found at the following website:

     
  • 23. 
    Communication from the Commission to the Council and the European Parliament,
     
  • 24. 
    OJ L 209, 2.8.1997, p. 1. Regulation as amended by Regulation (EC) No 1055/2005 (OJ L 174, 7.7.2005, p.

    1). The documents referred to in this text can be found at the following website:

     
  • 25. 
    Communication from the Commission to the Spring European Council,
     
  • 26. 
    The UK financial year runs from April to March.

     
  • 27. 
    The definition of public investment in the UK convergence programme, which is not an ESA concept, covers all public sector investment (that is, public corporations as well as general government) and includes capital grants to the private sector net of depreciation.

     
  • 28. 
    In particular, the data on projections for employment, unemployment, wage inflation and a detailed breakdown of revenue and expenditure projections on a general government basis after 2007/08 are not provided. Compared to the 2005 update, the horizon for the breakdown of expenditure on a general government basis is shorter in the current update, which is the last update before new detailed spending plans will be fixed in the July 2007 Comprehensive Spending
     
  • 29. 
    Deze databank van de Europese Unie biedt de mogelijkheid de actuele werkzaamheden (workflow) van de Europese instellingen (Europees Parlement, Raad, ESC, Comité van de Regio's, Europese Centrale Bank, Hof van Justitie enz.) te volgen. EURlex volgt alle voorstellen (zoals wetgevende en begrotingsdossiers) en mededelingen van de Commissie, vanaf het moment dat ze aan de Raad of het Europees Parlement worden voorgelegd.
     
  • 30. 
    EUR-lex provides an overview of the proposal, amendments, citations and legality.