2007/154/EC: Council Decision of 30 January 2007 abrogating Decision 2003/487/EC on the existence of an excessive deficit in France
Date: 2007-01-30
Institutions: Council of the European Union
Subjects: Council of the European Union, EC Decision, France, budget deficit, gross domestic product, public administration, public debt, repeal, short-term economic prospects

8.3.2007

EN

Official Journal of the European Union

L 68/3

(Acts adopted under the EC Treaty/Euratom Treaty whose publication is not obligatory)

II

DECISIONS

COUNCIL

COUNCIL DECISION

of 30 January 2007

abrogating Decision 2003/487/EC on the existence of an excessive deficit in France

(2007/154/EC)

THE COUNCIL OF THE EUROPEAN UNION,

(3)

Having regard to the Treaty
Community, and in particular Article 104(12) thereof,

establishing the European

Having regard to the recommendation from the Commission,

Whereas:

(1)

(2)

By Decision 2003/487/EC (1), following a recommend-
ation from the Commission in accordance with Article
it was decided that an excessive
104(6) of the Treaty,
deficit existed in France. The Council noted that
the
general government deficit was 3,1 % of GDP in 2002,
above the 3 % of GDP Treaty reference value, and
projected both by the French authorities
and the
Commission services to be above 3 % in 2003, while
the general government gross debt stood at 58,2 % of
GDP, and was very likely to breach the 60 % Treaty
reference value in 2003.

On 3 June 2003, in accordance with Article 104(7) of
the Treaty and Article 3(4) of Council Regulation (EC)
No 1467/97 of 7 July 1997 on speeding up and
clarifying the implementation of
the excessive deficit
procedure (2)
the Council made a recommend-
(EDP),
ation,
from the
a
on
based
recommendation
Commission,
addressed to France with a view to
bringing the excessive deficit situation to an end by
2004. The recommendation was made public.

(1) OJ L 165, 3.7.2003, p. 29.
(2) OJ L 209, 2.8.1997, p. 6. Regulation as amended by Regulation (EC)

No 1056/2005 (OJ L 174, 7.7.2005, p. 5).

Instead, on 25 November 2003,

taken by France had been insufficient

In October 2003, the Commission considered that the
measures
to
comply with the recommendation of 3 June 2003 and
the excessive deficit procedure be
recommended that
stepped up.
the
Council adopted conclusions addressing recommend-
ations to France for the correction of
the deficit by
2005, which were annulled by the Court of Justice of
the European Communities on 13 July 2004 (3). On 14
December 2004, the Commission adopted a Communi-
cation to the Council which concluded that 2005 should
be considered as the relevant deadline for the correction.
It also concluded that actions taken by France until then
were broadly consistent with a correction of the excessive
deficit by 2005, based on an adjustment in cyclically
adjusted terms of some 1 % of GDP over 2004 and
2005. On 18 January 2005,
the Council concurred
with this view.

the Treaty, a
In accordance with Article 104(12) of
Council Decision on the existence of an excessive
deficit is to be abrogated when the excessive deficit in
the Member State concerned has,
in the view of the
Council, been corrected.

for

the data

In accordance with the Protocol on the excessive deficit
the Commission
procedure annexed to the Treaty,
provides
the
the
procedure. As part of the application of this Protocol,
Member States are to notify data on government
deficits and debt and other associated variables twice a
year, namely before 1 April and before 1 October,
in
accordance with Article 4 of Council Regulation (EC)

implementation of

(4)

(5)

(3) Case C-27/04, Commission vs Council, [2004] ECR I-6649.

L 68/4

EN

Official Journal of the European Union

8.3.2007

No 3605/93 of 22 November 1993 on the application
the Protocol on the excessive deficit procedure
of
annexed to the Treaty
the European
Community (1).

establishing

(6)

Based on data provided by the Commission (Eurostat)
in accordance with Article 8g(1) of Regulation (EC)
No 3605/93 following the notification by France
before 1 October 2006 and on the Commission
services'
following
2006
conclusions are warranted:

forecast,

autumn

the

— the general government deficit, after

rising from
3,2 % of GDP in 2002 to 4,2 % of GDP in 2003,
was reduced to 3,7 % of GDP in 2004 and further to
2,9 % of GDP in 2005, which is below the 3 % of
GDP deficit reference value,

— over

in

(namely,

the
improvement

the period 2004 to 2005,

structural
adjustment
the
the
cyclically adjusted balance net of one-off and other
temporary measures) reached 1 percentage point of
Indeed,
GDP: 0,4 % in 2004 and 0,6 % in 2005.
in
although the reduction in the headline deficit
2005 below the 3 % Treaty
value
revenues and
benefited from substantial one-off
higher-than-expected
deficit
revenues,
reduction was also driven by a better expenditure
control at the State and health-care sector levels. In
particular,
increase in spending in the
health-care sector was drastically reduced compared
to previous years as the measures decided as part of
the 2004 health-care reform are bearing fruit,

the annual

reference

the

tax

that

the deficit-to-GDP ratio has been
indicates
brought below the 3 % of GDP ceiling in a credible
and sustainable manner. The improvement
in the
structural balance (the cyclically adjusted balance
is estimated at 0,5 %, 0,3 % and
net of one-offs)
0,6 % of GDP in 2006, 2007 and 2008, respectively.
This also has to be seen against the progress needed
towards
the medium-term objective (MTO) of a
balanced structural position as set by the French
authorities,

— after rising from 58,2 % of GDP in 2002 to 66,6 %
of GDP in 2005, breaching the 60 % of GDP Treaty
the debt-to-GDP ratio
reference value in 2003,
decreased to 65,4 % of GDP in the second quarter
of 2006. According to the Commission services'
autumn 2006 forecast,
the general government
gross debt is expected to fall further to 64,7 % of
GDP in 2006 and around 63 % of GDP by 2008
(on a no-policy change basis).

(7)

In the view of the Council, the excessive deficit in France
has been corrected and Decision 2003/487/EC should
therefore be abrogated,

HAS ADOPTED THIS DECISION:

Article 1

From an overall assessment it follows that the excessive deficit
situation in France has been corrected.

— for 2006, the Commission services' autumn 2006
forecast projects the deficit as being reduced further
to 2,7 % of GDP, better than the target set in the
the stability programme
January 2006 update of
reduction is expected to be
(2,9 %). The deficit
the annual spending
fall of
driven by a further
growth rate
sector and the
continuous expenditure control at State level which
is expected to meet its target of zero volume expen-
diture growth. The recourse to one-offs would be
limited to 1/4 % of GDP. The autumn forecast
projects for 2007 a further decline in the deficit to
2,6 % of GDP (with a recourse to one-offs limited to
0,05 % of GDP) and 2,2 % of GDP in 2008 (on a no-
policy change basis and without one-offs). This

in the health-care

Article 2

Decision 2003/487/EC is hereby abrogated.

Article 3

This Decision is addressed to the French Republic.

Done at Brussels, 30 January 2007.

For the Council
The President

P. STEINBRÜCK

(1) OJ L 332, 31.12.1993, p. 7. Regulation as last amended by Regu-

lation (EC) No 2103/2005 (OJ L 337, 22.12.2005, p. 1).