2007/738/EC: Council Decision of 9 October 2007 abrogating Decision 2006/125/EC on the existence of an excessive deficit in the United Kingdom
Date: 2007-10-09
Institutions: Council of the European Union
Subjects: Council of the European Union, EC Decision, United Kingdom, budget deficit, public finance, repeal, stability pact

17.11.2007

EN

Official Journal of the European Union

L 300/49

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

II

DECISIONS

COUNCIL

COUNCIL DECISION

of 9 October 2007

abrogating Decision 2006/125/EC on the existence of an excessive deficit in the United Kingdom

(2007/738/EC)

(3)

(4)

THE COUNCIL OF THE EUROPEAN UNION,

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)

the Treaty,

In its Decision 2006/125/EC (1), following a recommen-
dation from the Commission in accordance with Article
104(6) of
the Council decided that an
excessive deficit existed in the United Kingdom. The
Council noted that in financial year 2004/2005 (2) the
general government deficit was 3,2 % of GDP, above the
3 % of GDP Treaty reference value, while general
government gross debt stood at 40,8 % of GDP, well
below the 60 % of GDP Treaty reference value.

On 24 January 2006, 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 clar-
ifying the
excessive deficit
procedure (3), the Council made, based on a recommen-

implementation of

the

(1) OJ L 51, 22.2.2006, p. 14.
(2) According to Council Regulation (EC) No 1467/97, the relevant
budgetary data
established in
budgetary year (i.e. financial year) terms, running from 1 April to
31 March.

the United Kingdom are

for

dation from the Commission,
addressed to the United Kingdom that
deficit
2006/2007 at
made public.

recommendation
the excessive
to an end by
the latest. The recommendation was

situation should be brought

a

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

implementation of

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)
No 3605/93 of 22 November 1993 on the application
the Protocol on the excessive deficit procedure
of
the European
annexed to the Treaty
Community (4).
the data
that
notified in March 2007 for budgetary year 2006/2007
the United Kingdom
were government projections,
submitted in the
excessive deficit
context of
procedure a supplementary notification. This, received
on 16 July 2007,
for
reports
2006/2007, which has enabled the Commission to
assess budgetary developments in the United Kingdom
relative to the Council recommendation on bringing
the excessive deficit situation to an end by 2006/2007
at the latest.

establishing
the fact

In view of

outturns

actual

its

(3) OJ L 209, 2.8.1997, p. 6. Regulation as amended by Regulation (EC)

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

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

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

L 300/50

EN

Official Journal of the European Union

17.11.2007

(5)

Based on data provided by the Commission (Eurostat) in
accordance with Article 8g(1) of Regulation (EC) No
3605/93 following the notification by the United
Kingdom on 16 July 2007 and on the Commission
services' spring 2007 forecast, the following conclusions
are warranted:

— the general government deficit was reduced from
in 2005/2006 to 2,7 % in
3,2 % of GDP
2006/2007, below the 3 % of GDP deficit reference
value. This is slightly below the projection of 2,8 % of
GDP set in the December 2005 update of the United
Kingdom's convergence programme,

— fiscal consolidation in 2006/2007 resulted from an
increase in the revenue ratio of 0,4 percentage points
of GDP, especially through higher corporate tax
revenues. Total government expenditure between
2005/2006 and 2006/2007 grew in line with
nominal GDP, although capital spending was lower
than projected in the December 2006 convergence
programme
higher.
Compared with 2005/2006, during which year the
imputation of a one-off
transaction reduced the
deficit by 0,3 % of GDP, the improvement in the
structural balance (i.e. the cyclically-adjusted balance
net of one-off and other temporary measures)
in
2006/2007 is estimated at 0,7 % of GDP,

expenditure

current

and

— for 2007/2008,

in line with the deficit projection
published in the Budget of March 2007,
the
Commission services' spring 2007 forecast projects
the deficit to be reduced further, to 2,6 % of GDP,
driven by a rise in the revenue ratio, specifically the
tax burden, which is however almost completely
offset by a rise in the expenditure ratio. This deficit
ratio is higher than the official deficit projection of
2,3 % of GDP set in the December 2006 update of
the
a
convergence programme, on account of
downward revision in corporate taxation revenue.
For 2008/2009, the spring forecast projects, on a
no-policy change basis, a further decline in the
deficit to 2,4 % of GDP. This profile indicates that
the deficit has been brought below the 3 % of GDP
In
ceiling in a credible and sustainable manner.
is
the general government deficit
structural

terms,

projected to fall by 0,2 percentage points of GDP
in 2007/2008 and, on a no-policy change basis, by
0,3 percentage points in 2008/2009. This indicates a
rather modest path of future consolidation relative to
the favourable economic environment forecast,

— government debt increased from 39,6 % of GDP in
2004/2005 to 42,5 % in 2006/07. According to the
Commission services' spring 2007 forecast, the debt
ratio is projected to increase to around 43,9 % by
end-March 2009, but
remaining well below the
60 % of GDP reference value. A further strengthening
of
for
2008/2009 will be required to halt the increase in
the debt ratio.

the fiscal position beyond that

forecast

(6)

In the view of the Council, the excessive deficit in the
United Kingdom has been corrected and Decision
2006/125/EC should therefore be abrogated,

HAS ADOPTED THIS DECISION:

Article 1

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

Decision 2006/125/EC is hereby abrogated.

Article 2

Article 3

This Decision is addressed to the United Kingdom of Great
Britain and Northern Ireland.

Done at Luxembourg, 9 October 2007.

For the Council
The President

F. TEIXEIRA DOS SANTOS