WRITTEN QUESTION E-3177/02 by Charles Tannock (PPE-DE) to the Commission. The Integrity of the Growth and Stability Pact.
Date: 2002-11-07
Institutions: European Parliament, Provisional data
Subjects: European accounting system, France, Italy, Portugal, budget deficit, government, political right, public finance, stability pact, statistics

9.10.2003

EN

Official Journal of the European Union

C 242 E/45

(2003/C 242 E/045)

WRITTEN QUESTION E-3177/02

by Charles Tannock (PPE-DE) to the Commission

(7 November 2002)

Subject: The Integrity of the Growth and Stability Pact

As right-of-centre governments took power in a number of Member States, including France, Italy and
Portugal, it became clear that the budgetary deficits in these countries had been seriously underestimated.
In the case of Portugal the figure of 2,2 % claimed by the outgoing Socialist government has given way to
a figure of 4,1 %. In the case of Italy, a figure of 1,4 % has been revised upwards to 2,2 %. For the record,
can the Commission indicate what it now believes were the correct figures for each of the Member States
where there has been an upward revision following a change of government, does the Commission believe
that the upward revision of the Italian budgetary deficit was due entirely to the application of Eurostat’s
recent decision on the calculation of securitisation operations undertaken by general government (c.f. Euro-
Indicators news release 116/2002) and how was it possible for so many left-of-centre governments to pull
the wool over the Commission’s eyes using what many would regard as Enron-style accounting
procedures?

Does the Commission believe that it has now identified the principal methods used to disguise true
budgetary deficits and, if so, what measures has it taken to ensure that similar methods are not being used
in Member States where there has been no recent change of government?

lending) of

Finally, according to the Maastricht Treaty Protocol on the Excessive Deficit Procedure, government deficit
(surplus) means the net borrowing (net
the whole general government sector (central
government, state government, local government and social security funds), and is calculated according to
national accounts concepts (European System of Accounts, ESA95). Government debt is the consolidated
gross debt of the whole general government sector outstanding at the end of the year, whilst primary
surplus means the government deficit/surplus excluding interest charges. In his answer to Written Question
E-1620/02 (1), Commissioner Solbes Mira pointed-out that the British government’s finances ‘have been
close to balance or in surplus in recent years,’ thus upholding the requirements of the Growth and Stability
Pact while at the same time conforming to the British government’s own fiscal rules, including the so-
called ‘golden rule’, which stipulates that investment expenditure by government should not be counted as
expenditure for the purposes of the Growth and Stability Pact. Can the Commission clarify whether or not
such investment expenditure constitutes net borrowing under the terms of the Pact as defined by the
aforementioned Maastricht Treaty Protocol?

(1) OJ C 28 E, 6.2.2003, p. 125.

Answer given by Mr Solbes Mira on behalf of the Commission

(4 December 2002)

According to the protocol on the excessive deficit procedure, the deficit figure must be in line with the
European system of integrated economic accounts, the current version of which is ESA95 (1). Experience
accumulated over the years by both Member States and the Commission have led to an increase in the
quality of data and it must be acknowledged that the EDP has given a major impetus for improving the
quality and comparability of Community government accounts. The ESA95 government accounts are now
more reliable, complete, transparent and detailed, and are published in a more timely fashion than a few
years ago. Moreover, co-ordinated efforts have been made to harmonise the accounting rules and to check
the respective implementation. Thus, the government accounts of the different Member States are now of
better quality and more comparable than they used to be.

However, weaknesses can still be identified, as highlighted recently by the significant revision of figures
and therefore late identification of the excessive deficit in Portugal for 2001.

Improvements can therefore be introduced in different aspects of the budgetary collection and verification
process. Additional steps are therefore needed to further improve the reliability and timeliness of the
budgetary statistics which are the foundation on which the fiscal surveillance is built. The Commission will
soon propose to the Council a set of best practices on the reporting of government data. The purpose is to

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Official Journal of the European Union

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9.10.2003

clarify the role and responsibilities of different actors in order to increase transparency, quality and
timeliness of the budgetary data (both statistics and forecasts) used in the surveillance process.

The Commission published its 2002 autumn forecast on 13 November 2002. The 2002 deficit
in
Germany is now forecast to be 3,8 % of gross domestic product (GDP), in France 2,7 % of GDP, in Italy
2,4 % of GDP and in Portugal 3,4 % of GDP. In Italy, the 2001 deficit has been revised upward by 0,6 % of
GDP due to the Eurostat decision on the accounting of securitisation operations.

As regards the treatment of government investment expenditure in the calculation of net-lending, the ESA
and the EC Treaty are very clear: the recording in the accounts of investment expenditures are in no way
different to any other government expenditure. That is, recorded government investment expenditure has
an impact on net lending.

(1) Council Regulation (EC) 2223/96 of 25 June 1996 on the European system of national and regional accounts in the

Community (ESA 95) (cid:1) OJ L 310, 30.11.1996.

(2003/C 242 E/046)

WRITTEN QUESTION E-3180/02

by Charles Tannock (PPE-DE) to the Commission

(7 November 2002)

Subject: The Extension of the Block Exemption from Competition Law

Could the Commission indicate why it felt it necessary to extend the Block Exemption from Competition
Law for the motor trade for three years, even though there had been plenty of time for the industry to
prepare for its termination in September of this year?

The Commission retains wide-ranging residual powers in the area of Competition Law. Does it intend to
use them against motor manufacturers deemed to have violated EU Competition Law, and, if so, will it
respond only to complaints or will it initiate its own investigations?

One of my London constituents experienced problems which occur all too frequently to those who try to
purchase right-hand-drive vehicles on the continent.

He tried to purchase a Chrysler Grand Voyager in Holland given the very substantial price differential
(more than 30 %) but discovered that:

(a) Chrysler dealers in Holland require a full deposit for the vehicle as opposed to a small percentage

deposit if it is a left-hand-drive vehicle;

(b)

they cannot deliver in less than twelve months (although delivery time for a left-hand-drive vehicle in
Holland is three months and delivery time for a right-hand-drive vehicle in the UK is three months);

(c) a surcharge of EUR 2 000 is levied in Holland for right-hand-drive vehicles (surely not a reflection of

the true costs).

Are such practices legal, and,
investigators to investigate how widespread they are so long as the Block Exemption is maintained?

if not, has the Commission considered hiring teams of

independent

Answer given by Mr Monti on behalf of the Commission

(20 December 2002)

The first point raised by the Honourable Member, relating the reasons why the Commission felt it
necessary to adopt Regulation (EC) No 1400/2002 (1), has already been dealt with by the Commission in
detail in the reply to the Honourable Member’s Written Question E-0292/02 (2).