25.6.75 NoL162/13 OfficialJournaloftheEuropeanCommunities
COUNCIL DECISION
of16June1975
adjustingtheeconomicpolicyguidelinesfor1975
(75/361/EEC)
THECOUNCILOFTHEEUROPEAN
COMMUNITIES ,
HavingregardtotheTreatyestablishingtheEuropean
EconomicCommunity ;
HavingregardtoCouncilDecisionNo
74/120/EEC(')of18February1974ontheattain­
mentofahighdegreeofconvergence ofthe
economicpoliciesoftheMemberStatesoftheEuro­
peanEconomicCommunity ,andinparticularArticles
1and2thereof;
WhereastheCouncilagreeswiththeanalysisofthe
economicsituationsetoutinthecommunication
fromtheCommissionconcerningtheadjustmentof
theeconomicpolicyguidelinesfor1975,HASADOPTED THISDECISION :
Article1
TheCounciladoptstheguidelineswhicharespecified
intheAnnexfortheMemberStatesintheelaboration
oftheireconomicpolicy.
Article2
ThisDecisionisaddressedtotheMemberStates.
DoneatLuxembourg ,16June1975.
FortheCouncil
ThePresident
R.RYAN
(')OJNoL63,5.3.1974,p.16.

NoL162/14 OfficialJournaloftheEuropeanCommunities 25.6.75
ANNEX
ECONOMIC POLICYGUIDELINES
A.Generalguidelines
Economicpolicypriori­
ties1.In1975,theCommunitywillhavetoresolvesomemajoreconomicpolicy
problems :
—howtoreduceunemployment ,fightinflationandcorrectthebalanceofpayments;
—howtobringabouttheprogressivereductionofdivergenttrendswhichthreatenits
cohesion .
Complementarity of
short-term economic
policiesAsregardsthelatterproblem,thedeficitandsurplusmembercountriesbearajoint
responsibility forfollowingcomplementary policies.Albeitnotnegligible,theCommu­
nity'sroomformanoeuvreinthisareawillneverthelessbelimited.
Threegroupsofcoun­
tries
Restrictivepoliciesin
thecountrieswithheavy
deficits2.Thepresentsituationprecludesthemembercountriesbeingclassifiedaccordingto
generalcriteria.Nevertheless ,theycanbedividedintothreegroupsonthebasisoftheir
externalpositionsandtheintensityoftheinflationarypressurestowhichtheyaresubject.
3.Asfarasthecountrieswithheavydeficits(UnitedKingdomandItaly)are
concerned,itisimportantthat,whilemaintaininggenerallyrestrictivepolicies,they
shouldactivelyencouragethetransferofresourceswhichisessentialiftheyaretobring
aboutalastingimprovement intheirexternalaccounts;suchatransferofresources
shouldbeintotheexportsector,and,internally,intothoseinvestmentswhichwillyield
thehighestreturninthelong-termandwhicharemosturgentfromthepointofviewof
regionalpolicyandthesupportofemployment .Thisprocessrequiresaslowerriseinthe
standardofliving,sinceotherwiseinflationwillcontinuetohaveaharmfuleffecton
economicactivityandemployment .Moreover,theprospectofbringingaboutalasting
improvement intheirbalanceofpaymentswouldbecomeextremelyuncertainandthose
countrieswouldexperienceincreasingdifficultyinborrowingabroadtofinancetheir
excessiveexpenditureonconsumption .
DisequilibriaarealsoverypronouncedinIrelandbutthatcountryis,atthepresenttime,
subjecttoexternalfactorsand,moreover,hassuchahighlevelofunemployment and
underemployment thatitspositionmustbeconsideredasacaseapart.
Reflationarymeasuresin
thecountrieswithlarge
surpluses4.TheMemberStateswithlargebalanceofpaymentssurpluses(theFederalRepublic
ofGermanyandtheNetherlands )havealreadyintroducedbudgetaryandmonetary
measurestostimulateeconomicactivity.Thesemeasureswillhavethedesiredeffectonly
iftheyaregiventhesupportofalleconomicgroups,withundertakingsavailingthem­
selvesofinvestmentincentivesandtradeunionsforgoingexcessivewageclaims.Ifit
becomesevidentinthemonthsaheadthatthesegroupsarenotrespondingsufficientlyto
thereflationaryprogrammes ,appropriatemeanswillhavetobefoundandapplied
promptlyinordertoincreasetheeffectivenessoftheprogrammeswhilenotgivinga
furtherimpetustoinflationatalaterstageintheupswinginactivity.
5.OtherMemberStatesareinasituationbetweenthesetwogroupsonboththe
externalandinternalfronts,especiallyasfaraspricesareconcerned .Inparticular,their
balanceofpaymentsoncurrentaccountismovingtowardstheeliminationofsurpluses
(Belgium)orisimproving,atavaryingrate,(DenmarkandFrance).Owingtouncer­
taintiesintheworldeconomicsituationandtothedangerofaninsufficientslowdownin
theriseofprices,theoveralltenorofeconomicpolicymustremaincautiousforthese
countries .Intermediate positionof
otherMemberStates

25.6.75 NoL162/15 OfficialJournaloftheEuropeanCommunities
Supportforinvestment
Activepolicieson
employment andto
protectincomes6.Short-termeconomicrecoveryandthereductionofunemployment willonlylastif
progressisalsomadeinslowingdownrisesincostsandpricesandmodifyingthe
economicstructure.Thus,anappropriateinvestmentsupportpolicy,wherenecessarywith
thehelpofCommunityfundsisneededinallMemberStates.However,thenatureand
extentofsuchactionshouldbedifferentiatedaccordingtotheadjustmentofincomeand
demandneededinthedifferentgroupsofcountriesandregionsthereof.Ingeneral,
greaterselectivityofeconomicpolicyisrequiredespeciallytopreventthewasteof
resourceswhichunconditional supportfordecliningsectorswouldbringabout.Inparti­
cular,encouragement shouldbegiventothespontaneousrestructuringmadenecessaryby
theenergycrisis,bydevelopingthoseformsofinvestmentsmostcloselygearedtonew
demands(publictransport,energyproduction ,oil-savingtechnology ,scientificresearch,
etc.).Tothisend,particularencouragement shouldbegiventoentrepreneurial spirit,
mainlybygivingclearguidanceastothetypeofdevelopmenttobeundertaken .
7.Specificandconcertedpoliciesarealsoneededtoimprovetheemploymentsitua­
tionbyincreasingthemobilityoflabourtothebenefitofexpandingsectors,andesta­
blishingeffectivearrangements forvocationaltrainingandretraining,wherenecessary
withthehelpofCommunitymeans.Inaddition,changesshouldbemadeinsome
MemberStatesinthesocialsecuritysystems,particularlyasregardsunemployment insur­
ance,soastoprovidetheunemployedwithadequatebenefits.Ingeneral,effectiveprotec­
tionoftheincomesoftheleastaffluentsocialgroupswouldpermitfurtherconcentration
ofeffortontheadjustmentsmadenecessarybytheenergycrisis.
8.Theprocessofeliminatingthemainbalanceofpaymentsdisequilibriacannotbe
otherthangradual.Theorderlyfinancingofdeficitsshouldthereforebearrangeduntil
suchtimeastheadjustmentsinrealtermscantakeplace.Thiswouldavoidthedangerof
deficitMemberStatesbeingimpelledtotakeprotectionistmeasureslikelytoretardthe
recoveryofworldtrade.TheCommunityinstrumentsoffinancialsolidarityhavean
importantroletoplayinthiscontext,inconjunctionwithinternationalinstrumentsand
thecapitalmarkets.Inaddition,theCommunitymustitselfadoptthemeasuresneededto
avoidanyset-backtotheorderlydevelopmentofworldtrade,andalsopressfortheadop­
tionofsuchmeasuresatinternational level.Financialsolidarity

NoL162/16 OfficialJournaloftheEuropeanCommunities 25.6.75
B.GuidelinesfortheindividualStates
DENMARK thetaxandfamilyallowancereforms:thedeficitin
1975shouldbesomeDM50000million,asagainst
DM25000millionin1974(5and2-5%ofgross
domesticproductrespectively).Atthesametimeas
theFederalGovernment tookthesemeasures,the
Bundesbankappreciablyrelaxeditsmonetarypolicy.1.InDenmark,thecurrentphaseofnear-stagna­
tionoftheeconomyislikelytopersistthroughout
mostoftheyear.Unemployment mightrisefurther
forsomemonthsbeforestabilizingatahighlevel.
Theprincipalproblemforeconomicpolicymakers
willbetomitigatetheeffectsoftheslowdownin
economicactivityontheemployment levelwithout
endangeringtheimprovement alreadyunderwayin
foreigntradeanddomesticequilibrium .Theauthori­
tiesshouldthereforecontinuetohelpreducethepres­
sureofcosts,whichisstillheavy,whilenotrulingout
recoursetoselectiveandgradualactiontorevitalize
theeconomy.Thepolicymeasurestobeimplemented
shouldbeadjustedinthelightofthedegreeofmoder­
ationshownbythetwosidesofindustry.5.Thesemeasurestogethershouldbringabouta
gradualupturnintheeconomy.Indeedthereare
alreadysomesignsofarecoveryinbusinessconfi­
dence.Althoughitisverydifficulttoevaluatethe
strengthofthisimprovement ,theannualgross
domesticproductgrowthratecouldreach3to4%by
theendoftheyear.Theemploymentsituationshould
improve.Theincreaseinpricesshouldfurtherslow
down,althoughtheforeignbalancewillremainhigh.
6.Iftheeconomicupturnisdelayed,theeconomic
impactofthebudgetarymeasuresadoptedshouldbe
reviewed.Inthemonetaryfield,thegoaladoptedby
theBundesbank willstimulateexpansionwhile
continuingtoactasabrakeonprices.TheBundes­
bankshouldmaintainthisapproachduringthe
monthsaheadandencouragethecontinuedfallin
interestratesinthebankingsector,especiallyifthe
upwardmovementofpricesgoesonslackening .2.Inthebudgetaryfield,theeasingofpersonal
taxationhasalreadyprovidedanappreciablestimulus,
ashavethemeasurestakenintheconstructionsector;
thismayhavesetthestageforamoremoderaterise
inwagesandsalaries.Ifthisprospectisfulfilledand
if,atthesametime,thebalanceofpaymentson
currentaccountcontinuestoimprove,someofthe
proposedcutsinexpenditurecouldbecancelledin
ordertosustainthelevelofeconomicactivity.
FRANCE
3.Inthemonetaryfield,domesticliquidityhas
increasedataslightlyfasterpaceduringrecent
months.Afurtherrelaxationofmonetarypolicy,and
particularlyofcreditpolicyinordertoimprovethe
financialsituationofundertakings ,willdependonthe
successofanyincomespolicyandondevelopments
inpublicfinance.7.InFrance,thecurrentperiodofeconomicstagna­
tionislikelytobefollowedbyagradualupswing
during1975.Thelabourmarketsituationwillprob­
ablyimprove.Freshprogresswillnodoubtbemade
inreducingdisequilibria .Theriseinconsumerprices
willcontinuetoslowdownduringtheyear;itwill
probablybelessthantheannualrateof10%
recordedinrecentmonths.Alsothetradebalance
couldreachequilibriumbeforetheendof1975,but
somecautionisstillneededinassessingtheopening
forexportsprovidedbyFrance'smaintradingpart­
ners.FEDERALREPUBLIC OFGERMANY
4.Sincethemiddleofthepastyeareconomic
growthinGermanyhassteadilyweakenedandhas
increasinglydivergedfromtheguidelineslaiddown
bytheCouncil.TheFederalGovernmentdecided,last
December,tolaunchaprogrammetoencourage
privateandpublicinvestmentandtogettheunem­
ployedbacktowork.Powerfulstimulishouldbe
providedbythesharpincreaseinthepublicauthori­
ties'borrowingrequirement ,whichispartlydueto8.Thecautiouseconomicpolicystancerecom­
mendedintheannualreportontheeconomicsitua­
tionintheCommunity(')remainsessentialifachieve­
mentsinthefieldsofpricesandexternalequilibrium
arenottobeendangered .Accordingly ,theupswingof
economicactivitydependsasmuchonthegrowthof
(')OJNoC149,28.11.1974,p.1.

25.6,75 OfficialJournaloftheEuropeanCommunities NoL162/17
chancethattotaldemandwillpickupsomewhat
towardstheendof1975.Theupwardtrendinprices
duringtheyear,thoughstillverystrong,willbeslower
than1974.Thebalanceofpaymentsdeficitoncurrent
accountwillbesignificantlylowerthanlastyear's
level.investment—andparticularlyonhavingafurther
run-downofstocks—asonexportgrowth.
9.The1975FinanceActforecastsaslightsurplus
oftheorderofFF500million.Itisdesirablethatthe
outturnofthebudgetshouldnotdeparttoofarfrom
thisneutralline.Shouldtherevivalineconomic
growthbeslowinmaterializing itwouldbeappro­
priatetoconsiderfiscalmeasures,forexamplethe
defermentofthecollectionofcompanytaxes.
10.Thepresentcourseofmonetarypolicy,without
beingespeciallyrestrictive,seemswellsuitedtothe
currenteconomicsituation .16.Short-termeconomicpolicyfacesadifficult
problem:thefightagainstinflationandtheimprove­
mentintheexternalpositionmustremaintheprime
objectives;butitisalsoequallyimportanttostop,and
graduallyreverse,theprocessofrecession.Thesolu­
tiontothisproblemrequiresclosecooperationwith
thetwosidesofindustry,especiallyinviewofthe
negotiationswhichwillbegintowardstheendofthe
yearfortherenewalofnumerouscollectiveagree­
ments.
17.Inthefieldofbudgetarypolicy,theCouncil
Directiveof17December1974onthegrantingof
medium-term financialassistancerequiresthe1975
treasurydeficittobeheldtoLit8000000million
andtheincreaseintotalGovernmentexpenditureto
16%.Withintheselimits,expenditurelinkedwith
investmentmustberaised.Itwillbeeasiertoobserve
theceilingfixedforthetreasurydeficitifthefight
againsttaxevasionissteppedup.
18.Asregardsmonetarypolicy,aceilingofLit
24700000millionwaslaiddownintheabovemen­
tionedCouncilDirectiveforthegrowthoftotal
lendingduringtheperiodfrom1April1975to31
March1976.Withinthisceiling,whichmustcertainly
notbeexceededbutwhichitseemsdesirableshould
beusedtoitsfullextent,thereappearstobeastrong
caseforgivingprioritytofinancingproductiveinvest­
ment,particularlyinagriculture,residentialconstruc­
tion,andtheenergyandpublictransportsectors.
Furthermore ,themonetaryauthoritiesshouldsupport
thecurrenttendencyforinterestratestofall,while
ensuringthattheseratesremainwellabovethose
rulingabroad.IRELAND
11.InIrelandthelevelofeconomicactivitymay
remaindepresseduntiltheendoftheyear.Thelabour
marketsituationwillprobablyimproveverylittlein
thecomingmonths.Therateofincreaseinpriceswill
remainamongthemostrapidintheCommunity .In
thisperiodofslowgrowth,thebalanceofpayments
oncurrentaccountislikelytogoonimproving .
Economicpolicyshouldthereforesustainemploy­
mentthroughspecificmeasureswhichdonotaccen­
tuatetheinternalpressureofrisingcosts.
12.Ontheincomesfront,thewageandsalary
increasesfor1975writtenintoagreementsconcluded
lastyeararealreadyveryhigh.Itisthereforeimpor­
tantthatthenewnationalpayagreementdoesnot
resultinexcessiveincreases,especiallyintheindus­
triesalreadysufferingfromspecialdifficulties .
13.The1975budgetpresentedon15January1975
providesforaveryhighnetborrowingrequirement
(equivalenttosome13%ofgrossdomesticproduct)
althoughtheincreaseincapitalexpenditurerepre­
sentslittlegrowthinrealtermsandappearstobetoo
smallinthelightofforeseeableemploymenttrends.
Theobjectiveofbudgetarypolicyshouldthereforebe
torestrictpublicconsumption .
14.Monetarypolicy,althoughlargelydependenton
externalfactors,shouldremaincautiousinviewofthe
growthinliquiditywhichwillbebroughtaboutby
themonetaryfinancingofthebudgetdeficit.NETHERLANDS
19.IntheNetherlands ,theimplementation ofthe
importantpackageofreflationarymeasuresdecided
onlastNovemberandstrengthened inFebruary
(protectionofrealpersonalincomes,supportforbusi­
nessinvestment,easingofwagecosts,stimulationof
activityinthebuildingsectorandintheregions)
shouldallowsomeincreaseinproductioninthe
secondhalfoftheyearandcurbthegrowthofunem­
ployment.Theriseinconsumerpricesduringtheyear
shouldnotexceed8to9%,therateatwhichithasITALY
15.InItaly,thefall-offineconomicactivity,which
begantowardsthemiddleoflastyear,willnodoubt
continueuntilthesummer,owingtothepersistently
lowlevelofprivateconsumers'expenditureandthe
evenlowerlevelofinvestment .However,thereisa

NoL162/18 OfficialJournaloftheEuropeanCommunities 25.6.75
25.Thebudgetarymeasurestocombatunemploy­
mentshouldgohandinhandwiththemaintenance
oftherecenttendencytoeasemonetarypolicy.In
thisrespect,themoneysupplyshouldbeallowedto
increasesufficientlyandtheconditionsshouldbe
createdforafurtherloweringofinterestrates.
However,aslowerrateofincreaseinwagecostisan
importantconditionforachievingthedesiredimprove­
mentinthelabourmarketsituation .beenrunningforseveralmonths.Theimprovement
inthetermsoftrade,dueinparticulartothehigher
exportpricesofnaturalgas,couldleadtoanincrease
inthealreadyconsiderablebalanceofpayments
surplusoncurrentaccount.
20.Inrecentmonthstheupwardmovementof
wagecostshasslackeneddistinctly.Itisnowessential
thatthistrendshouldcontinueandbecomemore
pronouncediftherelativesuccessincombatinginfla­
tionistobeconsolidated andifthereistobean
upturninemploymentandinbusinessinvestment .
21.Inthebudgetaryfield,themeasuresalready
takenmustfirstbegiventimetohavetheirfulleffect
oneconomicactivityandemployment .Forthetime
being,therefore,thesemeasures,whicharereflected
inanappreciableincreaseinthenetborrowingrequir­
ement,likelytorisefromabout1%ofgross
domesticproductin1974toabout3-5%in1975,
shouldberigorouslyimplemented .However,inorder
tocombatunemployment ,theimplementation of
investmentexpenditureprovidedforinthebudget
shouldbespeededup.
22.Inthemonetaryfield,asubstantialincreasein
thecentralgovernmentdeficitandacontinuing
balanceofpaymentssurpluswouldsuggestthatthe
moneysupplywillgrowsufficientlytosupportthe
recovery .LUXEMBOURG
26.InLuxembourgwheretherecentfall-offinnew
ordersislikelytocontinue,especiallyintheironand
steelindustry,activitymayslowdownduring,thefirst
halfof1975.Therateofgrowthofconsumerprices
shouldfall.Thesurplusonexternalaccountwillprob­
ablygivewaytoanappreciabledeficit.
27.Astaxableincomeswillnotgrowonthescale
expectedearlier,therewillbeadeterioration inthe
netbudgetaryposition.
28.Inordertomaintainactivityinbuildingand
construction ,creditrestrictionsshouldbeeased,but
careshouldbetakentoavoidtheresurgenceofinfla­
tionarystrains.
BELGIUM
23.InBelgium,wheretheeconomicclimatehas
deteriorated noticeablysincetheautumnand
economicpolicywasrelaxedattheendoflastyear,
thegrowthofactivitycouldbeverysmallinthe
secondhalfof1975andunemployment maybecome
evenmorewidespread .Theupwardmovementof
consumerprices,whichremainedveryrapidupto
February,mayslackenappreciably ;theexternal
balancecouldalsodeterioratesomewhat .UNITEDKINGDOM
29.TheprospectsfortheBritisheconomyseemto
bevirtualstagnationbetweennowandtheendofthe
year,continuedunemployment ,furtherrapidrisesin
pricesandwagesandaslightreductioninthesubstan­
tialbalanceofpaymentsdeficitoncurrentaccount.
30.Thereductionofthebalanceofpayments
deficitshouldcontinuetobeoneoftheprincipal
aimsofeconomicpolicyin1975.Toachievethis,itis
essentialtocontainthegrowthofprivateconsump­
tion.Thismeansthatcareshouldbetakentoavoid
anylargeincreasesinrealincomesandinparticular,
increasesdesignedtooffsetanticipatedpricerises.
31.Giventheimpactoftheupsurgeinpricesand
wagesonpublicauthorityspendingandassumingthat
policiesremainunchanged ,thepublicsectornet
borrowingrequirementmustbeexpectedtogrowin
the1975/76financialyear.Vigorouseffortsshould
thereforebemadetoreducetheshareofthepublic
sectordeficitinthegrossdomesticproduct,putat
some8%for1974/75.Tothisend,itisparticularly
importanttofollowthebudgetarypolicyguidelines24.Inthebudgetaryfield,thereflationarymeasures
takeninlate1974andearly1975,andalsotheapprec­
iableriseinunemployment ,willmeanthatthefallin
thenetborrowingrequirementwillbedistinctly
smallerthaninitiallyforecast.Thebudgetmustbe
implemented insuchawayastohelppromotethe
recoveryofinvestment .Tothisend,clearpriority
shouldbegiventothemajorjob-creatinginvestment
programmesalreadyplannedunderthebudget.In
addition,theauthoritiesshould,ifnecessary,promote
businessinvestmentinprioritysectors.

25.6.75 OfficialJournaloftheEuropeanCommunities NoL162/19
announcedlastNovemberwithaviewtomaking
substantialcutsinsubsidiestonationalized industries .
Ifnecessaryadjustmentofcertainindirecttaxesto
pricemovementscouldbeconsidered .32.Thepresentcourseofmonetarypolicyshould
bemaintained .Inordertohelpfinancetheexternal
deficit,interestratepolicyshouldpreservetherelative
attractiveness oftheLondonmoneymarket.