2003/487/EC: Council Decision of 3 June 2003 on the existence of an excessive deficit in France — application of Article 104(6) of the Treaty establishing the European Community
Date: 2003-06-03
Institutions: Council of the European Union
Subjects: France, budget deficit, gross domestic product, public administration, public debt, short-term economic prospects

3.7.2003

EN

Official Journal of the European Union

L 165/29

II

(Acts whose publication is not obligatory)

COUNCIL

COUNCIL DECISION

of 3 June 2003

on the existence of an excessive deficit in France — application of Article 104(6) of the Treaty
establishing the European Community

(2003/487/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Com-
munity, and in particular Article 104(6) thereof,

Having regard to the recommendation from the Commission
under Article 104(6),

Having regard to the observations made by France,

Whereas:

(1)

(2)

(3)

(4)

In stage three of Economic and Monetary Union (EMU),
according to Article 104 of the Treaty Member States
are to avoid excessive government deficits.

The Stability and Growth Pact is based on the objective
of sound government finances as a means of strength-
ening the conditions for price stability and for strong
sustainable growth conducive to employment creation.

The Amsterdam Resolution of the European Council on
the Stability and Growth Pact of 17 June 1997 (1)
solemnly invites all parties, namely the Member States,
the
the Council and the Commission to implement
Treaty and the Stability and Growth pact in a strict and
timely manner.

The excessive deficit procedure under Article 104
provides for a decision on the existence of an excessive
deficit. The Protocol on the excessive deficit procedure
annexed to the Treaty sets out further provisions relating
to the implementation of the excessive deficit procedure.
Council Regulation (EC) No 3605/93 (2)
lays down
detailed rules and definitions for the application of the
provision of the said Protocol.

(5)

Article 104(5) of the Treaty requires the Commission to
if the Commission
address an opinion to the Council
considers that an excessive deficit in a Member State

(1) OJ C 236, 2.8.1997, p. 1.
(2) OJ L 332, 31.12.1993, p. 7. Regulation as last amended by
Commission Regulation (EC) No 351/2002 (OJ L 55, 26.2.2002, p.
23).

exists or may occur. The Commission addressed such an
opinion on France to the Council on 7 May 2003.
According to this opinion:

— following publication by the Commission of the first
notification on deficit and debt data for 2002,
in
showing that
the general Government deficit
France reached 3,1 % of GDP in that year,
the
in accordance with Article 104(3) of
Commission,
the Treaty, adopted on 2 April 2003 a report on
France which takes account of the relevant factors,

— in accordance with Article 104(4) of the Treaty, the
Economic and Financial Committee formulated an
opinion on the report of the Commission,

— the Commission considers that there exists an exces-

sive deficit in France.

(6)

(7)

Article 104(6) of the Treaty lays down that the Council
should consider any observations which the Member
State concerned may wish to make before the Council
decides, after an overall assessment, whether an excessive
deficit exists.

The overall assessment leads to the following conclu-
sions. The general Government deficit reached 3,1 % of
GDP in 2002 in France. Although budgetary develop-
ments have been adversely affected by continued weak-
ness in economic activity,
the general
Government deficit over the 3 % of GDP reference value
does not result, in the meaning of the Treaty, from an
unusual event outside the control of the French authori-
ties, nor is it the result of a severe economic downturn.
According to Commission calculations, the deterioration

the excess of

L 165/30

EN

Official Journal of the European Union

3.7.2003

in the 2002 budgetary position results mainly from a worsening in the cyclically-adjusted budgetary
position. The breaching of the 3 % of GDP threshold in 2002 is also rooted in the reversal of the
budgetary consolidation process which took place since 1999, and is likely not to be temporary.
Indeed, according to the French authorities and to the Commission Spring 2003 forecasts, the
general Government deficit will be above 3 % of GDP also in 2003. Finally, the debt ratio will
increase further in 2003, and will very likely breach the 60 % of GDP Treaty reference value in that
year,

HAS ADOPTED THIS DECISION:

From an overall assessment it follows that an excessive deficit exists in France.

Article 1

This Decision is addressed to the French Republic.

Article 2

Done at Luxembourg, 3 June 2003.

For the Council

The President

N. CHRISTODOULAKIS