Council Opinion of 12 February 2001 on the updated stability programme of France, 2002-2004
Date: 2001-02-12
Institutions: Council of the European Union
Subjects: France, coordination of EMU policies, economic convergence

9.3.2001

EN

Official Journal of the European Communities

C 77/5

invites the Danish authorities to maintain the
The Council
prominent place of structural reforms on the policy agenda.
In particular, efforts
supply could prove
to raise labour
necessary. The Council therefore encourages the authorities to
consider lowering taxes on labour income also beyond 2002,

for which a tax reduction is already planned. However, given
that the Danish economy currently seems to be operating at a
level slightly above its potential, such a tax cut would need to
be compensated by offsetting budgetary measures in order not
to add to the risk of overheating.

COUNCIL OPINION

of 12 February 2001

on the updated stability programme of France, 2002-2004

(2001/C 77/05)

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 12 February 2001,
stability programme of France which covers
2001-2004.

the Council examined the updated
the period

Economic growth has been robust over the past two years,
broadly in line with the projections of
the 1999 updated
stability programme. In 2000, the French economy registered
a third consecutive year of strong GDP growth with relatively
low inflation. The unemployment rate continued to decline and
reached 9,2 % in November, down from 10,9 % one year
in unemployment, wage and
earlier. Despite this sharp fall
price
very moderate. Headline
remained
inflation increased from 0,5 % in 1999 to 1,7 % in 2000
mainly due to higher oil prices.

developments

The Council notes
that, building on a more favourable
outcome than expected in 1999 and an expenditure growth
slower than initially projected, the general government deficit
for 2000, estimated at 1,4 % of GDP, will be lower than
ratio in 2000,
the government debt
initially expected;

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

estimated at 58,4 % of GDP, was also lower than targeted by
one percentage point. The broad economic policy guidelines
which aim at using better than expected revenues to achieve
faster
the
reduction in the government deficit. Therefore,
Council
finds that a better budgetary outcome could have
been achieved in 2000, taking into account the favourable
economic and public finances developments.

in which potential growth stays at

The budgetary projections of
the updated programme are
based, as in the past, on two macroeconomic scenarios, a
its
scenario,
cautious
current
level of 2,5 % a year, while in the favourable
scenario, potential output is estimated to gradually increase
to 3 % due to stronger investment and employment growth.
From 2001, real GDP growth is projected to follow one of the
two non-inflationary scenarios. The favourable one is presented
as the economic policy target and the most likely projection. In
both cases, inflation is projected to stay at a low level over the
entire period.

The Council considers that the two macroeconomic scenarios
of the programme provide a plausible range of values for GDP
growth between 2002-2004 and that
the macroeconomic
performance of France in recent years indicates a probable
rise in the capacity of the French economy to sustain higher
non-inflationary growth than in the past, resulting from a rise
in capital accumulation and a fall in structural unemployment;
the Council considers,
the macro-
in view of
economic projections of the favourable scenario as attainable.

the above,

scenarios. These developments

The updated programme is projecting a general government
surplus of 0,2 % of GDP in 2004 under
the favourable
scenario and a deficit of 0,5 % under the cautious one. The
government debt ratio is expected to decrease from 58,4 % in
2000 to 54,5 % or 53 % according to the alternative macro-
economic
reflect mainly
structural progress; however, the Council regrets that a deficit
the
remains in 2004 under the cautious scenario. Even if
projected budgetary position provides an adequate safety
margin against breaching the 3 % of GDP deficit threshold in
normal circumstances (cid:151) in conformity with the requirements
of the stability and growth pact (cid:151) the Council considers that
the French Government should seek a situation of budgetary
balance in 2004 also under the cautious scenario and to
advance the timing of budgetary surplus ahead of 2004
under the favourable one. This would be in line also with its
recommendation on the 1999 updated stability programme.

C 77/6

EN

Official Journal of the European Communities

9.3.2001

fiscal

improving the functioning of

real expenditure growth; however,

The Council welcomes that an important tax reform is being
trend.
implemented without compromising the global
This reform is in line with the recommendations of
the
broad economic policy guidelines concerning the measures
the labour market.
aimed at
the budgetary strategy based on
The Council commends
control of
the Council
considers
that a budgetary policy based on expenditure
ceilings requires an effective system to rein in spending as
soon as any slippage is detected especially in the field of
health care expenditure; consequently the Council invites the
French Government to introduce the appropriate mechanism
enabling the respect of the expenditure norms. The Council
notes
the increase in expenditure included in the
Finance Law for 2001, 1,8 % in real terms, accounts for a

that

significant part of the norm for the cumulated increase for
the period 2001 to 2003 fixed at 4 % in real terms in the
1999 updated programme. Moreover the Council notes that
the norm for the cumulated increase in expenditures has
spending being allowed to
been revised upwards,
increase by 4,5 % in real terms from 2002 to 2004. In the
view of the Council, a lower increase in expenditure would be
desirable to allow a faster reduction in the government deficit.

real

that

considers,
should be used,

available budgetary
further,
The Council
margins
in
as
strengthening the budgetary position and preparing for future
challenges, notably the budgetary burden from the ageing of
population.
further progress with pension
reform would be welcome.

a matter of priority,

In this respect,

COUNCIL OPINION

of 12 February 2001

on the updated stability programme of Austria, 2000-2004

(2001/C 77/06)

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 5(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

On 12 February 2001 the Council examined the updated
stability programme for Austria which covers
the period
2000-2004.

The updated programme envisages a decline in the general
government budget deficit from 1,4 % of GDP in 2000 to a
balanced position in 2002 and the following years. The
government gross debt is expected to decrease from 61,1 %
of GDP to below the 60 % reference value in 2002 and
further to 55,3 % in 2004. The Council notes with satisfaction
that, in compliance with its recommendation on the previous
update of the programme (2), the current programme envisages
a much faster reduction of the government deficit. Moreover,
the Council acknowledges that the budgetary goals are to be
achieved without resorting to the one-off measures included in
the previous update.

(1) OJ L 209, 2.8.1997, p. 1.
(2) OJ C 162, 10.6.2000, p. 1.

that,

in spite of higher-than-projected
The Council notes
growth, the estimated deficit for 2000 in the current update
is not lower than projected in the previous programme once
originally unbudgeted universal mobile telecommunications
system (UMTS) proceeds are excluded. The Council recom-
mended in its opinion on the previous update and in the
recommendations of the June 2000 broad economic policy
guidelines (BEPG)
in the event of higher growth, a
better deficit outcome should be achieved. The available data
do not allow at present a conclusive appraisal of the implemen-
tation of the budget in 2000. If, however, the outcome for the
general government deficit were not lower than the objective
of 1,7 % of GDP, Austria would not have fully complied with
last year’s Council opinion and the BEPG recommendations.

that,

The deficit projections of
the programme are based on a
macroeconomic scenario expecting output growth to decline
from its cyclical peak of 3,5 % in 2000 to 2,3 % in 2003 and
resume to 2,5 % in 2004, amounting to an annual average
growth of 2,6 % over the forecast period.

The Council considers that the expected growth is feasible in
view of the presently good supply and demand conditions for
the Austrian economy.

The underlying budgetary position implicit in the deficit goals
is in line with the requirements of the stability and growth pact
from 2001 onwards,
i.e. they provide Austrian Government
finances with a large enough safety margin to withstand a
normal cyclical downturn without breaching the 3 % of GDP
reference value for the deficit. The Council notes with satis-
faction that,
the
stability and growth pact is now respected earlier, which is
appropriate in view of
the currently favourable economic
conditions.

in accordance with its recommendations,