Council Opinion of 13 March 2000 on the updated stability programme of France, 2000 to 2003
Date: 2000-03-13
Institutions: Council of the European Union
Subjects: France, economic policy, economic stabilisation, gross domestic product, public finance

18.4.2000

EN

Official Journal of the European Communities

C 111/1

I

(Information)

COUNCIL

COUNCIL OPINION

of 13 March 2000

on the updated stability programme of France, 2000 to 2003

(2000/C 111/01)

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 5(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

On 13 March 2000, the Council examined the update of the
stability programme of France, which covers the period up to
2003. From a formal point of view, the Council notes that the
French authorities presented the Programme pluriannuel de
finances publiques, 2001-2003, as the update of
its stability
programme, but regrets, particularly in view of the Council’s
declaration of 15 March 1999, that such a programme does
not publicly and specifically identify itself as a stability
programme and calls on France to entitle its document (cid:145)stability
programme(cid:146).

The Council notes with satisfaction that the French general
government deficit for 1999 was lower than projected in the
initial stability programme. This outcome was mainly the result
of buoyant tax revenue. However, the Council also notes that
the norms for the evolution of government expenditure in real
terms, which had been established in the initial programme,
have not been fully met. This was partially the result of
lower-than estimated prices, but also of higher than projected
expenditure, at current prices, in the health insurance and local
authorities’ sectors.

The updated stability programme assumes a real GDP growth
of at least 3 % in 2000. For the period 2001 to 2003, macro-
economic projections
two secenarios
(cautious and favourable), according to which growth is
expected to be within the band 2,5 % to 3 %. The Council
notes
the range presents a GDP
projection close to grwoth potential; however it considers

are presented for

the lower end of

that

that given the latest developments and short-term perspectives,
the higher growth scenario may be seen as a realistic basis for
economic policy.

In line with its opinion (2) on the initial stability programme,
the Council considers as appropriate the budgetary strategy
terms allowing a
based on control of expenditure in real
reduction of government expenditure realtive to GDP;
in
particular this approach addresses the problem of relatively
high government expenditure in France and the impact
it
efficiency. However, practical
may have on economic
management of
in
circumstances of price developments below expectations or if
expenditure targets are overshot in specific sectors, as was the
case in 1999. The Council considers that the effectiveness of
the strategy of the programme is highly dependent on prompt
corrective measures in the event of any significant slippage
from targets in specific sectors. The Council recommends
that, whenever possible, such corrective measures should be
implemented within the same year, or at the latest in the
following year.

such a strategy may become difficult

a

tax

update

already

includes

The Council notes that the French economy is currently in a
favourable cyclical position. The Council also notes that the
programme
reduction
programme. The Council considers that in case of a wider
budgetary room of man(cid:156)uvre, either as a result of higher
inlcuding a 1999 deficit ratio
growth or for other reasons,
lower than the estimate of 2,1 % of GDP mentioned in the
programme, the opportunity should be taken to reduce the
deficit more quickly. This would allow government accounts
to be in balance in 2003 and the fulfilment of the Stability and
Growth Pact maybe even this year, or in 2001 with a more
comfortable margin.

safety margin to prevent

The Council considers that the underlying budgetary position
which corresponds to the targeted deficit ratios from 2001
would provide a sufficient
the
from breaching the 3 % of GDP threshold under
deficit
normal cyclical conditions;
the medium-term target for the
government finances of the updated stability programme is
therefore in conformity with the provisions of the Stability
and Growth Pact. Furthermore,
the Council considers that
the updated stability programme is consistent with the Broad
Economic Policy Guidelines.

(1) OJ L 209, 2.8.1997, p. 1.

(2) OJ C 124, 5.5.1999, p. 2.