Recommendation for a Council opinion on the updated stability programme of Belgium, 2007-2011
Date: 2008-06-11
Institutions: European Commission
Subjects: Belgium, budget estimate, budget policy, economic convergence, economic forecasting, public finance, stability programme

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 11.6.2008 
SEC(2008) 2013 final 

Recommendation for a 

COUNCIL OPINION 

On the updated stability programme of Belgium, 2007-2011 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1. 

GENERAL BACKGROUND 

The Stability and Growth Pact is based on the objective of sound government finances as a 
means  of  strengthening  the  conditions  for  price  stability  and  for  strong  sustainable  growth 
conducive to employment creation. The 2005 reform of the Pact acknowledged its usefulness 
in  anchoring  fiscal  discipline  but  sought  to  strengthen  its  effectiveness  and  economic 
underpinnings as well as to safeguard the sustainability of the public finances in the long run. 

Council  Regulation  (EC)  No  1466/97  on  the  strengthening  of  the  surveillance  of  budgetary 
positions  and  the  surveillance  and  coordination  of  economic  policies1,  which  is  part  of  the 
Stability and Growth Pact, stipulates that each Member State has to submit, to the Council and 
the Commission, a stability or convergence programme and annual updates thereof. Member 
States  that  have  already  adopted  the  single  currency  submit  (updated)  stability  programmes 
and Member States that have not yet adopted it submit (updated) convergence programmes. 
The  first  stability  programme  of  Belgium  was  submitted  in  December  1998.  In  accordance 
with the Regulation, the Council delivered an opinion on it on 15 March 1999 on the basis of 
a  recommendation  from  the  Commission  and  after  having  consulted  the  Economic  and 
Financial  Committee.  As  regards  updated  stability  and  convergence  programmes,  the 
regulation  foresees  that  these  are  assessed  by  the  Commission  and  examined  by  the 
Committee and if necessary and following the same procedure as set out above, the updated 
programmes may be examined by the Council. 

2. 

BACKGROUND FOR THE ASSESSMENT OF THE UPDATED PROGRAMME 

The Commission has examined the most recent update of the stability programme of Belgium, 
submitted  on  21  April  2008,  and  is  recommending  a  Council  opinion  on  it  (see  box  for  the 
main points covered by the assessment). 

In  order  to  set  the  scene  against  which  the  budgetary  strategy  in  the  updated  stability 
programme is assessed, the following paragraphs summarise: 

(1) 

(2) 

(3) 

(4) 

1 

the most recent assessment of the country’s position under the preventive arm of the 
Stability and Growth Pact (summary of the Council opinion on the previous update of 
the stability programme); 

the orientations for budgetary policies adopted by the April 2007 Eurogroup; 

the May 2008 update of the country-specific broad economic policy guidelines in the 
area of budgetary policies; 

the  Commission’s  assessment  of  the  October  2007  implementation  report  of  the 
national reform programme. 

OJ  L  209,  2.8.1997,  p.  1.  Regulation  as  amended  by  Regulation  (EC)  No  1055/2005  (OJ  L  174, 
7.7.2005, p. 1). The documents referred to in this text are available at: 
http://ec.europa.eu/economy_finance/about/activities/sgp/main_en.htm. 

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2.1. 

The assessment in the Council opinion on the previous update 

In  its  opinion  of  27  March  2007,  the  Council  summarised  its  assessment  of  the  previous 
update of the stability programme, covering the period 2006-2010, as follows. "The Council 
considers  that  the  strategy  of  a  continued  reduction  of  the  still  high  debt  stock  provides  an 
example  of  fiscal  policies  conducted  in  compliance  with  the  Pact.  However,  while  the 
programme  foresees  a  gradual  build-up  of  surpluses  (notably  through  reduced  interest 
expenditure) starting from a balanced position in nominal terms, there are some risks to the 
achievement of the budgetary targets. Nevertheless, the medium-term objective is expected to 
be reached within the programme period."  

In view of its assessment, the Council invited Belgium to "ensure that the budgetary target for 
2007  is  met  and  strengthen  the  pace  of  adjustment  towards  the  MTO  thereafter,  including 
through a reduction of the recourse to one-off measures" and "in the light of the high level of 
debt  and  the  projected  increase  in  age-related  expenditure,  to  better  address  the  long-term 
sustainability  of  public  finances  by  at  least  achieving  the  MTO  as  well  as  by  implementing 
reforms." 

2.2. 

Orientations for budgetary policies adopted by the Eurogroup in April 2007 

On  20  April  2007,  with  a  view  to  improving  the  coordination  of  fiscal  policies  in  the  euro 
area,  Eurogroup  ministers  discussed  national  budgetary  developments  in  2007  and  the 
preliminary policy outlook for 2008 and their implications for the euro area. 

Reaffirming their adherence to the sound fiscal policy principles of the revised Stability and 
Growth Pact and to national fiscal rules, Ministers committed to (i) build on the better-than-
expected budgetary outcomes in 2006 to pursue more ambitious budgetary targets than those 
set in the end-2006 updates of the stability programmes; (ii) implement their 2007 budgets as 
planned,  avoiding  expenditure  overruns,  and  using  unexpected  extra  revenues  to  reduce 
government  deficit  and  debt;  and  (iii)  carefully  design  fiscal  policy  plans  for  2008  so  as  to 
accelerate the adjustment towards the MTO for Member States which have not reached it and 
for those which have reached it to avoid feeding macroeconomic imbalances overall2. 

2.3.  May 2008 update of the country-specific broad economic policy guidelines in the 

area of budgetary policies 

On  14  May  2008,  the  Council  adopted  a  recommendation  on  the  2008  update  of  the  broad 
guidelines  for  the  economic  policies  of  the  Member  States  and  the  Community  and  on  the 
implementation  of  Member  States'  employment  policies3.  In  the  area  of  budgetary  policies, 
Belgium was recommended to “strengthen fiscal consolidation” and was encouraged to focus 
on  “fully  implementing  the  strategy  aiming  to  ensure  the  long  term  sustainability  of  public 
finances,  including  expenditure  restraints,  fiscal  surpluses,  and  a  persistent  reduction  of 
government debt”. In addition, all euro area Member States were recommended to “continue 
pursuing  budgetary  consolidation  towards  their  medium-term  objectives  in  line  with  the 
Stability and Growth Pact, hence striving to achieve an annual structural adjustment of at least 
0.5 % of GDP as a benchmark” and “to improve the quality of public finances by reviewing 

2 

3 

The entire statement can be found at: 
www.gouvernement.lu/salle_presse/actualite/2007/04/20pm_krecke_berlin/MTBR_EG_conclusions-
finalCLEAN.rtf 
OJ L 139, 29.5.2008, p. 59. 

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public expenditures and taxation, and by modernising public administration, with the intention 
to  enhance  productivity  and  innovation,  thereby  contributing  to  economic  growth, 
employment and fiscal sustainability”. 

2.4. 

The Commission assessment of the October 2007 implementation report of the 
national reform programme  

On 11 December 2007, the Commission adopted its Strategic Report on the renewed Lisbon 
strategy  for  growth  and  jobs,  which  includes  an  assessment  of  the  October  2007 
implementation  report  of  Belgium’s  national  reform  programme4  and  is  summarised  as 
follows. 

Belgium’s  national  reform  programme  identifies  as  key  priorities  in  order  to  create  growth 
and jobs: the sustainability of public finances; the reduction of labour costs; the creation of a 
more  dynamic  labour  market;  the  stimulation  of  the  economy  through  investment  and 
reforms;  strengthening  the  social  security  system;  and  strengthening  the  synergies  between 
environmental  protection  and  growth.  The  Commission's  assessment  is  that  Belgium  has 
made  good  progress  in  implementing  its  national  reform  programme  over  the  2005-2007 
period, despite some slowdown in the pace of reforms in 2007.  

Against  the  background  of  the  strengths  and  weaknesses  identified  and  the  evidence  on 
progress  made,  the  Commission  recommended  that  Belgium  was  recommended  to  give 
highest  priority  to  the  challenges  in  the  areas  of  the  high  tax-burden  on  labour,  whilst 
strengthening fiscal consolidation and improving labour market performance.  

In  addition,  Belgium  should  also  focus  on  the  areas  of:  long  term  sustainability  of  public 
finances;  the  competition  in  gas  and  electricity  markets;  R&D  and  innovation  performance; 
and the employment rate for older workers and vulnerable groups. 

Based  on  the  Commission  Strategic  Report,  the  Council  adopted  on  14  May  2008 
recommendations on the 2008 update of the broad guidelines for the economic policies of the 
Member States, including Belgium. 

4 

Communication  from  the  Commission  to  the  European  Council,  “Strategic  report  on  the  renewed 
Lisbon  strategy  for  growth  and  jobs:  launching  the  new  cycle  (2008-2010)”  -  COM(2007)  803, 
11.12.2007. 

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Box: Main points covered by the assessment 

As required by Article 5(1) (for stability programmes) and Article 9(1) (for convergence programmes) 
of Council Regulation (EC) No 1466/97, the assessment covers the following points: 
•  whether the economic assumptions on which the programme is based are plausible; 
•  the  medium-term  budgetary  objective  (MTO)  presented  by  the  Member  State  and  whether  the 

adjustment path towards it is appropriate; 

•  whether  measures  being  taken  and/or  proposed  to  respect  that  adjustment  path  are  sufficient  to 

achieve the MTO over the cycle; 

•  when assessing the adjustment path towards the MTO, whether a higher adjustment effort is made 
in economic good times, whereas the effort may be more limited in economic bad times, and, for 
euro-area and ERM II Member States, whether the Member State pursues an annual improvement 
of the cyclically-adjusted balance, net of one-off and other temporary measures, of 0.5% of GDP as 
a benchmark to meet its MTO; 

•  when defining the adjustment path to the MTO (for Member States that have not yet reached it) or 
allowing a temporary deviation from the MTO (for Member States that have), the implementation 
of  major  structural  reforms  which  have  direct  long-term  cost-saving  effects  (including  by  raising 
potential  growth)  and  therefore  a  verifiable  impact  on  the  long-term  sustainability  of  public 
finances (subject to the condition that an appropriate safety margin with respect to the 3% of GDP 
reference  value  is  preserved  and  that  the  budgetary  position  is  expected  to  return  to  the  MTO 
within the programme period), with special attention for pension reforms introducing a multi-pillar 
system that includes a mandatory, fully-funded pillar; 

•  whether the economic policies of the Member State are consistent with the broad economic policy 

guidelines. 

The  plausibility  of  the  programme’s  macroeconomic  assumptions  is  assessed  by  reference  to  the 
Commission  services’  spring  2008  forecast,  using  also  the  commonly  agreed  methodology  for  the 
estimation of potential output and cyclically-adjusted balances. 

The assessment also examines: 
•  the  evolution  of  the  debt  ratio  and  the  outlook  for  the  long-term  sustainability  of  the  public 
finances,  which  should  be  given  “sufficient  attention  in  the  surveillance  of  budgetary  positions” 
according  to  the  Council  report  of  20  March  2005  on  “Improving  the  implementation  of  the 
Stability  and  Growth  Pact”.  A  Commission  Communication  of  12  October  2006  sets  out  the 
approach to the assessment of long-term sustainability5; 

•  the degree of consistency with the national reform programme, submitted by Member States in the 
context of the Lisbon strategy for growth and jobs, and its October 2007 implementation report. In 
its cover note of 7 June 2005 to the European Council on the broad economic policy guidelines for 
the period 2005-2008, the ECOFIN Council stated that the national reform programmes should be 
consistent with the stability and convergence programmes; 

•  compliance  with the code of conduct6, which inter  alia prescribes a common  structure and set of 

data tables for the stability and convergence programmes. 

5 

6 

Communication  from  the  Commission  to  the  Council  and  the  European  Parliament,  “The  long-term 
sustainability of public finances in the EU” - COM(2006) 574, 12.10.2006 - and European Commission, 
Directorate-General for Economic and Financial Affairs (2006), “The long-term sustainability of public 
finances in the European Union”, European Economy No 4/2006. 
“Specifications  on  the  implementation  of  the  Stability  and  Growth  Pact  and  guidelines  on  the  format 
and  content  of  stability  and  convergence  programmes”,  endorsed  by  the  ECOFIN  Council  of  11 
October 2005. 

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Recommendation for a 

COUNCIL OPINION 

On the updated stability programme of Belgium, 2007-2011 

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 
policies7, 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: 

(1) 

(2) 

On [8 July 2008] the Council examined the updated stability programme of Belgium, 
which covers the period 2007 to 20118. 

Over the last 10 years, real GDP has grown by some 2¼% on average, slightly above 
the  average  growth  rate  in  the  euro  area.  This  relatively  high  GDP  growth  led  to  a 
decline  in  the  unemployment  rate,  while  the  employment  rate  (especially  of  the 
younger and older workers) and the hours worked remain low, reflecting high labour 
taxation and labour market rigidities, low job search requirements and a low effective 
retirement age. The budget has been hovering around a balanced position since 2000 
(except in 2005), and the debt ratio, which had fallen from 134% of GDP in 1993 to 
108%  of  GDP  in  2000,  continued  its  impressive  decline  and  is  now  below  85%  of 
GDP.  Increasing  the  employment  rate,  together  with  ambitious  budgetary  positions, 
would contribute to the long-term sustainability of public finances. 

(3) 

The macroeconomic scenario underlying the programme projects real GDP growth to 
fall  from  2.8%  in  2007  to  1.9%  in  2008  and  stabilise  around  2%  in  the  following 

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8 

OJ  L  209,  2.8.1997,  p.  1.  Regulation  as  amended  by  Regulation  (EC)  No  1055/2005  (OJ  L  174, 
7.7.2005, p. 1). The documents referred to in this text can be found at the following website: 
http://ec.europa.eu/economy_finance/about/activities/sgp/main_en.htm. 
The update was submitted once a government with full powers had been installed, thus well beyond the 
1 December deadline set in the code of conduct. 

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years.  Assessed  against  currently  available  information9,  the  scenario  for  2008  and 
2009  appears  to  be  based  on  favourable  growth  assumptions  given  the  deteriorated 
external  environment  and  higher  inflation  since  the  projections  included  in  the 
programme were finalised. Growth assumptions for 2010-2011 are broadly plausible. 
The programme update expects inflation to rise to 3.0% in 2008, and to slow down to 
1¾% over the period 2009-2011. The programme's inflation projections for 2008-2009 
appear to be on the low side in view of the marked rise in commodity and processed 
food  prices  in  recent  months.  Furthermore,  the  employment  growth  projections  of 
around 1% per annum in the programme update appear to be relatively high in view of 
below-potential  GDP  growth 
the 
programme's wage growth projections are on the low side for 2008, they appear high 
for  the  following  years  (3¼  -  3½  %),  especially  compared  to  the  projected  low 
inflation rate. 

the  programme  period.  While 

throughout 

(4) 

(5) 

For 2007, the general government deficit was 0.2% of GDP, against a surplus target of 
0.3% of GDP set in the previous update of the stability programme. The worse outturn 
in  2007  was  due  to  higher  expenditure  growth  than  planned  which  was  only  partly 
offset by a small positive base effect from a better-than-expected outcome in 2006 and 
a  positive  revenue  growth  surprise.  Higher-than-planned  expenditure  reflected,  in 
particular, a strong increase in subsidies paid to companies under the service voucher 
scheme and a lower-than-expected impact of one-off measures. The revenue surprise 
resulted  chiefly  from  higher-than-expected  social  contributions  and  occurred  in  spite 
of  the  non-implementation  of  a  number  of  planned  revenue-increasing  one-offs.  The 
budgetary implementation in 2007 was thus not fully in line with the invitation in the 
Council opinion of 27 March 2007 on the previous update of the stability programme10 
and  with  the  April  2007  Eurogroup  orientations  for  budgetary  policies,  since 
unexpected extra revenue was used for higher-than-budgeted expenditure. 

The main goal of the medium-term budgetary strategy in the programme is to ensure a 
continuous  reduction  of  the  still  high  debt  ratio  of  close  to  85%  of  GDP  in  2007  to 
around  71%  of  GDP  in  2011  through  a  gradual  build-up  of  headline  budgetary 
surpluses  to  1%  of  GDP  in  2011,  starting  from  a  balanced  budget  in  2008.  The 
primary surplus, which has been decreasing since 2001 (from 7.0% to 3.7% of GDP in 
2007) in parallel to the progress in debt reduction, is projected to increase to 4.4% of 
GDP by 2011. As a result of the worse-than-expected outturn in 2007, the budgetary 
targets  (both  in  nominal  and  structural  terms)  are  below  the  ones  in  the  previous 
update throughout the programme period. The structural balance, calculated according 
to the commonly agreed methodology, is expected to improve from a deficit of ¼% of 
GDP  in  2007  to  a  surplus  of  almost  1½%  of  GDP  in  2011.  Compared  to  what  was 
envisaged  in  the  previous  update  of  the  stability  programme,  the  achievement  of  the 
medium-term objective (MTO) - a surplus of 0.5% of GDP in structural terms (i.e. in 
cyclically-adjusted terms net of one-off and other temporary measures) - is delayed by 
one  year  to  2009.  The  adjustment  takes  place  on  both  the  expenditure  and  revenue 
side.  The  planned  expenditure  reduction  of  0.7  percentage  point  of  GDP  in  nominal 
terms  is  attributable  chiefly  to  a  fall  in  interest  expenditure  which  results  from  the 
projected decline in the debt ratio. The revenue increase amounts to 0.5% of GDP and 

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10 

The  assessment  takes  notably  into  account  the  Commission  services'  spring  2008  forecast  and  the 
Commission assessment of the October 2007 implementation report of the national reform programme. 
OJ C 89, 24.4.2007, p. 2. 

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(6) 

(7) 

(8) 

follows from the expected growth of tax bases. In contrast to the previous update, the 
programme explicitly foresees no further recourse to one-off measures after 2008. 

The  budgetary  outcomes  could  be  worse  than  projected  in  the  programme.  First,  the 
macroeconomic environment could be worse than projected in the programme update, 
especially  in  2008  and  2009.  In  particular,  the  favourable  assumptions  regarding 
employment, wage and consumption growth may have led to an overestimation of tax 
revenue. In addition, the expected overall tax elasticity seems on the high side in 2008. 
Regarding primary expenditure, the programme does not include measures that seem 
necessary to achieve the planned adjustment in a context of rising ageing-related costs 
and relatively strong projected wage increases. Moreover, excluding the reduction in 
interest  expenditure,  the  composition  of  the  adjustment  is  geared  strongly  to  the 
revenue side, possibly reducing the sustainability of the adjustment. Finally, whilst the 
budget remained broadly in balance over the last years, the achievement of the aimed-
for budget surpluses was postponed. In spite of the good macroeconomic conditions in 
2007, the budgetary target was not reached in the absence of a government with full 
powers  following  the  federal  elections  in  June.  In  2008,  further  measures  seem 
necessary  to  achieve  the  target.  In  view  of  the  risks  to  the  macro-economic  outlook 
and the budgetary targets mentioned above, the development of the debt ratio is likely 
to  be  somewhat  less  favourable  than  projected  in  the  programme,  although  the  debt 
remains on a firm downward path. 

In  view  of  this  risk  assessment,  the  budgetary  stance  in  the  programme  may  not  be 
sufficient to ensure that the MTO is achieved by 2009, as envisaged in the programme. 
However, a sufficient safety margin against breaching the 3% of GDP deficit threshold 
with normal cyclical fluctuations will be provided throughout the programme period. 
The  pace  of  adjustment  towards  the  MTO  implied  by  the  programme  should  be 
strengthened in 2008 by implementing additional structural budgetary measures in the 
context of the planned budget control exercise in order to ensure that the objective of a 
balanced budget is met. In 2009, it should be backed up by measures, in particular on 
the  expenditure  side,  to  be  in  line  with  the  0.5  %  of  GDP  benchmark  improvement 
specified  in  the  Stability  and  Growth  Pact  and  to  reach  the  MTO  as  planned.  The 
Council also notes that the budgetary plans for 2008 are not fully consistent with the 
April 2007 Eurogroup orientations for budgetary policies. Although the debt ratio may 
decrease less than projected in the programme, it seems to be sufficiently diminishing 
towards the reference value over the programme period. 

Belgium  appears  to  be  at  medium  risk  with  regard  to  the  sustainability  of  public 
finances.  The  long-term  budgetary  impact  of  ageing  is  above  the  EU-27  average, 
influenced notably by a relatively high increase in pension expenditure as a share of 
GDP over the coming decades. The effective retirement age in Belgium is one of the 
lowest  in  the  EU,  and  raising  it  is  the  aim  of  the  Generation  Pact  which  brought  a 
number of changes to the pension system. Although this represents a step in the right 
direction,  national  projections  show  that  this  reform  would  not  reduce  the 
sustainability  gaps.  The  budgetary  position  in  2007  as  estimated  in  the  programme, 
though  slightly  worse  than  the  starting  position  of  the  previous  programme, 
contributes  to  offsetting  the  projected  long-term  budgetary  impact  of  population 
ageing but is not sufficient to fully offset future spending pressures. Maintaining high 
primary  surpluses  over  the  medium  term,  bringing  the  debt  ratio  below  the  Treaty 
reference value and implementing further measures aimed at addressing the substantial 

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increase  in  age-related  expenditure  would  contribute  to  reducing  risks  to  the 
sustainability of public finances. 

(9) 

The stability programme seems to be consistent to some extent with the October 2007 
implementation  report  of  the  national  reform  programme.  In  particular,  both  reports 
consider  the  sustainability  of  public  finances  in  light  of  population  ageing  as  a  key 
challenge  for  the  Belgium  economy.  The  stability  programme  however  does  not 
contain  a  qualitative  assessment  of  the  overall  impact  of  the  October  2007 
implementation  report  of  the  national  reform  programme  within  the  medium-term 
fiscal strategy nor systematic information on the direct budgetary costs or savings of 
the main reforms envisaged in the national reform programme. On the other hand, the 
budgetary projections of the programme seem to take into account the public finance 
implications  of  the  actions  already  implemented  on  the  basis  of  the  national  reform 
programme. 

(10)  The  budgetary  strategy  in  the  programme  is  broadly  consistent  with  the  country-
specific  broad  economic  policy  guidelines  included  in  the  integrated  guidelines  and 
the guidelines for euro area Member States in the area of budgetary policies issued in 
the context of the Lisbon strategy. 

(11)  As  regards  the  data  requirements  specified  in  the  code  of  conduct  for  stability  and 
convergence programmes, the programme has some gaps in the required and optional 
data11. 

The  overall  conclusion  is  that,  after  an  impressive  reduction  in  the  debt  ratio  since  1993  to 
85%  in  2007,  the  programme  envisages  a  continued  and  rapid  reduction  through  a  gradual 
build-up of headline surpluses following the budgetary deterioration in 2007. The budgetary 
consolidation  mainly  builds  upon  a  reduction  in  interest  expenditure  and  an  increase  in  tax 
revenue,  while  efforts  on  primary  expenditure  remain  small.  There  are  risks  to  the 
achievement  of  the  budgetary  targets  particularly  in  view  of  the  relatively  favourable 
underlying  macroeconomic  assumptions  and  the  fact  that  the  programme  does  not  specify 
measures which seem required to meet the targets. The adjustment to the MTO in 2008 does 
not  appear  to  be  sufficient  and  it  seems  unlikely  that  the  MTO  will  be  met  in  2009,  as 
planned, in the absence of additional measures. 

In view of the above assessment and also in the light of the April 2007 Eurogroup orientations 
for fiscal policies Belgium is invited to: 

(i) 

(ii) 

ensure  that  the  objective  of  a  balanced  budget  is  met  in  2008  and  the  MTO  is 
obtained  in  2009  by  carrying  out  the  benchmark  adjustment  in  structural  terms  of 
0.5%  of  GDP,  including  through  the  implementation  of  additional  structural 
measures, in particular on the expenditure side; 

in  the  light  of  the  still  high  level  of  debt  and  the  projected  increase  in  age-related 
expenditure,  continue  addressing  the  long-term  sustainability  of  public  finances  by 
achieving  high  structural  primary  surpluses  as  well  as  by  implementing  reforms  to 
increase the employment rate and potential growth and to reduce the budgetary cost 
of ageing. 

11 

In particular, the data on the sectoral balances are not provided. 

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Comparison of key macroeconomic and budgetary projections 

Real GDP 
(% change) 

HICP inflation 
(%) 

Output gap1 
(% of potential GDP) 

Net lending/borrowing vis-à-
vis the rest of the world 
(% of GDP) 

General government balance 
(% of GDP) 

Primary balance 
(% of GDP) 

Cyclically-adjusted balance1 
(% of GDP) 

Structural balance3 
(% of GDP) 

Government gross debt 
(% of GDP) 

Notes: 

SP Apr 2008 
COM Apr 2008 
SP Dec 2006 
SP Apr 2008 
COM Apr 2008 
SP Dec 2006 
SP Apr 2008 
COM Apr 20082 
SP Dec 2006 
SP Apr 2008 
COM Apr 2008 
SP Dec 2006 
SP Apr 2008 
COM Apr 2008 
SP Dec 2006 
SP Apr 2008 
COM Apr 2008 
SP Dec 2006 
SP Apr 2008 
COM Apr 2008 
SP Dec 2006 
SP Apr 2008 
COM Apr 2008 
SP Dec 20064 
SP Apr 2008 
COM Apr 2008 
SP Dec 2006 

2006 
2.8 
2.8 
2.7 
2.3 
2.3 
2.4 
0.1 
0.1 
-0.3 
n.a. 
3.4 
2.0 
0.3 
0.3 
0.0 
4.3 
4.3 
4.1 
0.3 
0.3 
0.2 
-0.4 
-0.6 
-0.4 
88.2 
88.2 
87.7 

2007 
2.7 
2.7 
2.2 
1.8 
1.8 
1.9 
0.3 
0.3 
-0.4 
n.a. 
3.2 
2.0 
-0.2 
-0.2 
0.3 
3.7 
3.7 
4.2 
-0.4 
-0.3 
0.5 
-0.3 
-0.3 
0.1 
84.9 
84.9 
83.9 

2008 
1.9 
1.7 
2.1 
3.0 
3.6 
1.8 
-0.1 
-0.3 
-0.4 
n.a. 
2.6 
2.2 
0.0 
-0.4 
0.5 
3.7 
3.3 
4.1 
0.0 
-0.2 
0.7 
0.0 
-0.2 
n.a. 
81.5 
81.9 
80.4 

2009 
2.0 
1.5 
2.2 
1.7 
2.3 
1.8 
-0.4 
-1.0 
-0.4 
n.a. 
2.4 
2.4 
0.3 
-0.6 
0.7 
3.8 
2.9 
4.1 
0.5 
-0.1 
0.9 
0.5 
-0.1 
n.a. 
78.1 
79.9 
76.6 

2010 
2.0 
n.a. 
2.2 
1.8 
n.a. 
1.9 
-0.5 
n.a. 
-0.3 
n.a. 
n.a. 
2.7 
0.7 
n.a. 
0.9 
4.1 
n.a. 
4.2 
1.0 
n.a. 
1.1 
1.0 
n.a. 
n.a. 
74.7 
n.a. 
72.6 

2011 
2.0 
n.a. 
n.a. 
1.8 
n.a. 
n.a. 
-0.8 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
1.0 
n.a. 
n.a. 
4.3 
n.a. 
n.a. 
1.4 
n.a. 
n.a. 
1.4 
n.a. 
n.a. 
71.1 
n.a. 
n.a. 

1 Output gaps and cyclically-adjusted balances from the programmes as recalculated by Commission services on the basis 

of the information in the programmes. 

2 Based on estimated potential growth of 2.5%, 2.5%, 2.2% and 2.2% respectively in the period 2006-2009. 
3 Cyclically-adjusted balance excluding one-off and other temporary measures. According to the most recent programme, 
one-off and other temporary measures are deficit-reducing for 0.7% of GDP in 2006 and deficit-increasing for 0.1% of GDP 
in 2007. According to the Commission services' spring forecast, one-off and other temporary measures are deficit-reducing 
for 0.9% of GDP in 2006 and deficit-increasing for 0.1% in 2007. 

4 The December 2006 update of the stability programme did not provide information on the use of one-off measures in 

the years 2008 to 2010. 

Source: 

Stability programme (SP); Commission services’ spring 2008 economic forecasts (COM); Commission services’ 

calculations 

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