Council opinion of 21 January 2003 on the updated stability programme of Greece, 2002 to 2006
Date: 2003-01-21
Institutions: Council of the European Union
Subjects: Greece, budget policy, economic policy, gross domestic product, public finance, stability programme

4.2.2003

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Official Journal of the European Union

C 26/3

3. Where the producer or the importer of the product cannot
be identified, each supplier of the product shall be treated as
its producer unless he informs the injured person, within a
reasonable time, of the identity of the producer or the
the person who supplied him with the
importer or of
product, cf. Article 3(3) of the Directive. Apart from this
specific Article
contains no provisions
concerning the liability of the supplier.

the Directive

4. At the time of the adoption of the Directive (Session 1025
of the Council, 25 July 1985), the following joint statement
of the Council and the Commission concerning the scope of
the Directive was inserted in the Council minutes:

‘With regard to the interpretation of Articles 3 and 12, the
Council and the Commission are in agreement that there is
nothing to prevent individual Member States from laying
legislation rules regarding liability
down in their national
for
intermediary liability is not
intermediaries,
covered by the Directive. There is further agreement that
under the Directive the Member States may determine rules
on the final mutual apportionment of
liability among
several liable producers (see Article 3) and intermediaries.’

since

At the same time the following statement was inserted in
the Council minutes concerning the understanding of
Article 3(3):

‘The Council notes that
the word “supplier” within the
meaning of Article 3(3) means the person who operates
in the chain of distribution.’.

5. In a judgment of 25 April 2002 (case C-52/00) the Court of
Justice of the European Communities established that the
Directive seeks to achieve,
in the matters regulated by it,
complete harmonisation of the laws, regulations and admin-
also
the Member States
istrative provisions of
the same date in cases C-154/00 and
judgments of
Justice also estab-
C-183/00). Furthermore,

the Court of

(see

in case C-52/00 that

legislation
lished
providing that the supplier of a defective product is to be
liable in all cases and on the same basis as the producer
constitutes a violation of the Directive.

a national

6. Thus, it seems that Member States may no longer lay down
rules on liability of suppliers, i.e. persons who operate in
the chain of distribution, based on the same ground as the
liability system in the Directive concerning liability of
producers. Except for cases provided for in Article 3(3) a
system of
liability
therefore seems to be precluded.

liability of suppliers based on strict

7. This legal situation gives rise to concern, since as pointed
out
from
in paragraph 3 the Directive does not, apart
Article 3(3), contain provisions concerning the liability of
the supplier.

8. The possibility to lay down rules on liability of suppliers,
including rules on strict liability, could involve benefits to
the consumers, regardless of whether these rules are laid
down at national or Community level.
In relevant cases
the consumer would then be able to raise his claim
against the producer, subsequent suppliers,
including the
the product, or them all. This could improve
seller of
consumer's possibility of actually obtaining compensation.

The Council also recalls that one of the general objectives of
the Community is to promote consumer
interests and
ensure a high level of consumer protection, cf. Articles 95
and 153 of the Treaty.

9. THE COUNCIL CONSIDERS that against this background there
is a need to assess whether Directive 85/374/EEC, as
amended by Directive 1999/34/EC, should be modified in
such a way as to allow for national rules on liability of
suppliers based on the same ground as the liability system
in the Directive concerning liability of producers.

COUNCIL OPINION

of 21 January 2003

on the updated stability programme of Greece, 2002 to 2006

(2003/C 26/03)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the recommendation of the Commission,
after consulting the Economic and Financial Committee,

Having regard to the Treaty establishing the European
Community,

HAS DELIVERED THIS OPINION:

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,

(1) OJ L 209, 2.8.1997.

On 21 January 2003 the Council examined the 2002 update of
the stability programme of Greece, which covers the period
2002 to 2006. The
the
requirements of
the code of conduct on the content and
format of the programmes endorsed by the Ecofin Council
on 10 July 2001. The programme partly conforms with the
recommendations of the BEPGs.

conforms with

programme

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Official Journal of the European Union

4.2.2003

In 2002, real GDP growth decelerated somewhat, as a result of
deteriorating external environment, but remained robust, at
3,8 %,
as projected in the 2001 stability programme.
Inflation pressures under the impact of second round effects
from the oil prices hike and other transitory factors, such as
bad weather conditions, although easing in recent months, are
still persisting with the inflation rate remaining high: the HICP
was increasing by an annual rate of 3,9 % in November 2002.

Government to introduce a code of fiscal stability, in response
to the recommendation in the Council opinions on the 2000
stability programme (2) and on the 2001 update (3). The
Council urges the Greek authorities to accompany this new
law by the introduction of appropriate mechanisms to ensure
expenditure control. Setting binding norms for some categories
of current public expenditures, such as the public sector wage
bill, will contribute to the effective implementation of this
code.

for

The 2002 update of the stability programme projects annual
real GDP growth at around 3,8 % in yearly average for the
period 2003 to 2006, and marginally lower rates than the
2001 update
the period until 2004. The Council
the projected real GDP growth as attainable,
considers
particularly until 2004 as economic activity will be under-
pinned by high private and public investment related to the
preparation of the Olympic Games and sustained by the inflow
of
financial resources from the third Community Support
is
framework. However,
essential that fiscal policy remains tight and wage increases
are based on labour productivity changes.

for growth to be

sustained it

The Council notes that
the general government accounts
deteriorated in 2000 and 2001, when compared with the
estimates of the 2001 update, due to a large extent to the
revisions of
in order to
the government accounts figures,
ensure compliance with ESA national accounting rules. As a
consequence, the starting point of the budgetary projections
changed considerably as compared with the 2001 update:
according to the 2002 updated stability programme a general
government deficit of 1,1 % of GDP is estimated for 2002
instead of a surplus of 0,8 % of GDP as projected in the
2001 update. Similarly,
ratio is
estimated at 105,3 % of GDP in 2002 in the current update,
to be compared to 97,3 % of GDP in the previous update.

government debt

the

The Council considers that
the budgetary developments as
portrayed in the revised data, in particular the slow pace of
reduction in the government debt ratio, in a period when the
Greek economy has been growing at high rates, is a matter of
serious concern.

that

the 2002 update projects

the
The Council notes
government balance to turn from a deficit equal to 1,1 % of
GDP in 2002 to a surplus of 0,6 % of GDP in 2006; at the
same time, the government debt ratio is expected to decline
from 107 % of GDP in 2001 to 87,9 % of GDP in 2006; in
particular, during the period 2001 to 2004, from a higher
initial
level, the debt ratio is projected to decline by 10,9
percentage points of GDP instead of 9,6 percentage points as
projected in the 2001 update.

The Council notes that the improvement in the government
balance in the period from 2002 to 2006 relies both on the
reduction in interest payments and on the retrenchment in
current primary expenditure. However, the Council considers
that,
fast and
continuous reductions in primary current expenditure are
difficult
the programme does not
include clear binding norms for current primary expenditure.
the Greek
The Council

taking into consideration recent experience,

to achieve. Up to now,

takes note of

initiative of

the

that

the level and recent developments

The Council considers that further budgetary adjustment effort
is needed. Since the budgetary adjustment projected in the
2002 update is back-loaded, a heavy burden falls on later
years of the programme. In 2006 there may still be a small
cyclically adjusted government deficit. However, the Council
considers
in the
government debt ratio require a stronger and more robust
medium term budgetary adjustment, by at
least 0,5 % of
GDP per year in underlying terms. This is also required given
the perspective of increasing budgetary costs stemming from
the
the Greek
favourable
Government
macroeconomic situation to undertake determined effort in
order to implement a durable budgetary adjustment leading
to an improvement in the underlying budgetary position and
a satisfactory pace of debt reduction.

ageing population. The Council urges

to take advantage of

the current

implementation of

The Council notes that strengthening structural reforms is a
key economic policy objective of the updated programme; it
considers that although progress has been made in recent years
in this area,
reforms must
continue in the product, services and labour markets in order
to ensure the efficiency in the markets and the competitiveness
of the economy; the Council encourages the Government to
proceed to the necessary reforms rapidly and welcomes the
intention of the Government
to implement reforms in the
area of budgeting and management of expenditure in the
public sector.

structural

In this context

The Council welcomes the information provided in the updated
programme on long-term sustainability of public finances. The
Council considers that on the basis of current policies there is a
serious risk of budgetary imbalances emerging in the future
the Council
due to the ageing population.
notes the information provided in the updated programme
on the ‘second phase’ of the reform of the social security
system introduced in 2002 as recommended in its opinion
on the 2001 updated stability programme (3).
If debt
to make a noticeable contribution towards
reduction is
meeting the budgetary cost of ageing populations,
then
reaching a balanced budget position by 2006 is essential; this
should be part of an ambitious three-pronged strategy to meet
the long-term budgetary consequences of ageing and may have
to include the running of surpluses. Running sound public
finances over the long run will allow to achieve a significant

(2) OJ C 77, 9.3.2001.
(3) OJ C 51, 26.2.2002.

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Official Journal of the European Union

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reduction in the debt ratio prior to the budgetary impact of
ageing populations taking hold. The Council considers that
further reforms are required to the pension system to avoid
an unsustainable increase in public spending. Furthermore, the

encourages

the Greek

to promote
Council
supplementary privately-funded pension schemes and to take
measures
the
evolution of age related expenditures.

to raise participation rates and to control

authorities

COUNCIL OPINION

of 21 January 2003

on the updated Stability Programme of France, 2004-2006

(2003/C 26/04)

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 21 January 2003 the Council examined the updated
stability programme of France which covers the period 2003
to 2006. This update is the first programme prepared by the
new Government, which took office in June 2002; it provides a
budgetary strategy designed to support a strong and lasting
in economic and employment growth. The
improvement
programme complies with the requirements of
the revised
Code of Conduct on the content and format of stability and
convergence programmes. The Council considers that
the
programme complies partly with the recommendations of the
2002 Broad Economic Policy Guidelines.

The Council, having identified a significant divergence in 2002
budgetary developments from the projections of
the 2001
update of the stability programme, and considering that this
divergence is not corrected in the plans for 2003, adopted on
21 January 2003 a recommendation with a view to giving
early warning to France in order to prevent the occurrence
of an excessive deficit. According to this recommendation: (i)
the appropriate
The French Government
measures in order to ensure that
the general Government
deficit does not breach the 3 % of GDP threshold in 2003;

should take all

(ii) Adopting measures apt to improve the cyclically-adjusted
budgetary position by at least 0,5 percentage point of GDP
would not only reduce the risk for the general government
deficit to breach the 3 % of GDP threshold in 2003, but also
contribute to resuming a budgetary consolidation path towards
a close to balance position as from 2003;
(iii) Continuous
adjustment in the underlying budgetary position by at least
0,5 % of GDP per year should be pursued also in subsequent
years in order to achieve the medium-term budgetary position
of close to balance or in surplus by 2006.

General government finances deteriorated markedly in 2002.
The updated stability programme estimates the 2002 general
government deficit at 2,8 % of GDP, a level higher than that
recommended in the early warning and well above the 1,4 % of
GDP planned in the previous update. The Council notes that a
large part of the slippage in 2002 is due to a deterioration in
the underlying balance, which mainly reflects an overrun in
expenditures. The budget
the general
this projection is
government deficit at 2,6 % of GDP;
consistent with a decrease in the cyclically-adjusted by 0,2 %
of GDP in 2003 to 2,6 % of GDP (2).

for 2003 projects

The macroeconomic assumption underlying the budget of an
increase in real GDP by 2,5 % in 2003 is to be considered as
optimistic. Therefore, there is a danger for the government
deficit to breach the reference value in 2003. A further deterio-
ration in the 2002 position, which cannot be excluded, or an
eventual slippage in the 2003 budget could also bring the
general government deficit above 3 % of GDP in 2003. In its
Autumn forecast, the Commission projected an increase in the
government deficit by 0,2 percentage point between 2002 and
2003 under the assumption of real GDP growth at 2,0 %.
Finally, a risk exists that the government debt breaches the
60 % of GDP reference value in 2003.

For the period 2004 to 2006, the macroeconomic projections
of the 2002 update are based on two scenarios: a ‘cautious’
scenario, with real GDP growth at 2,5 % a year over the period,
and a ‘favourable’ scenario where real GDP growth reaches 3 %

(1) OJ L 209, 2.8.1997.

(2) These calculations are based on the production function method

approved by the Council.