Recommendation for a COUNCIL DECISION abrogating Decision 2010/285/EU on the existence of an excessive deficit in Germany
Date: 2012-05-30
Institutions: European Commission
Subjects: Germany, budget deficit, budget estimate, economic recession, public debt, public expenditure, stability pact

EUROPEAN COMMISSION 

Brussels, 30.5.2012  
COM(2012) 274 final 

Recommendation for a 

COUNCIL DECISION 

abrogating Decision 2010/285/EU on the existence of an excessive deficit in Germany 

EN 

   EN 

 
 
 
  
 
Recommendation for a 

COUNCIL DECISION 

abrogating Decision 2010/285/EU on the existence of an excessive deficit in Germany 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 126(12) thereof, 

Having regard to the recommendation from the Commission, 

Whereas:  

(1) 

(2) 

(3) 

By Council Decision 2010/285/EU of 2 December 20091, following a proposal from 
the Commission in accordance with  Article 126(6) of the Treaty, it was decided that 
an  excessive  deficit  existed  in  Germany.  The  Council  noted  that  the  general 
government  deficit  planned  for  2009  was  3.7%  of  GDP,  thus  above  the  3%  of  GDP 
Treaty reference value, while the general government gross debt was planned to reach 
74.2% of GDP in 2009, thus above the 60% of GDP Treaty reference value2.  

On 2 December 2009, in accordance with Article 126(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  procedure3,  the  Council,  based  on  a 
recommendation from the Commission, addressed a recommendation to Germany with 
a view to bringing the excessive deficit situation to an end by 2013 at the latest. The 
recommendation was made public. 

In  accordance  with  Article  4  of  the  Protocol  on  the  excessive  deficit  procedure 
annexed to the Treaties, the Commission provides the data for the implementation of 
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 3 of Council 
Regulation (EC) No 479/2009 of 25 May 2009 on the application of the Protocol on 
the  excessive  deficit  procedure  annexed  to  the  Treaty  establishing  the  European 
Community4.  

1 
2 

3 
4 

OJ L 125, 21.5.2010, p. 38. 
The general government deficit and debt for 2009 were subsequently revised to currently 3.2% of GDP 
and 74.4% of GDP respectively. 
OJ L 209, 2.8.1997, p. 6.  
OJ L 145, 10.6.2009, p. 1.  

EN 

2 

   EN 

 
 
                                                 
(4)  When considering whether a decision on the existence of an excessive deficit should 
be  abrogated,  the  Council  should  take  a  decision  on  the  basis  of  notified  data. 
Moreover, a decision on the existence of an excessive deficit should be abrogated only 
if  the  Commission  forecasts  indicate  that the  deficit  will  not  exceed  the  3%  of  GDP 
threshold over the forecast horizon5. 

(5) 

Based on data provided by the Commission (Eurostat) in accordance with Article 14 
of Regulation (EC) No 479/2009 following the notification by Germany before 1 April 
2012 and on the Commission services’ 2012 spring forecast, the following conclusions 
are warranted: 

– 

– 

– 

Having stood at 3.2% of GDP in 2009 and 4.3% of GDP in 2010, the general 
government deficit in Germany has been brought down to 1% of GDP in 2011, 
thus below the 3% reference value, two years ahead of the deadline set by the 
Council.  This  improvement  was  driven  by  favourable  cyclical  conditions,  the 
robust 
fiscal 
consolidation  efforts  and  the  fading-out  of  the  one-off  impact  of  financial 
sector stabilisation measures on the deficit in the previous year.  

the  phasing-out  of  stimulus  measures, 

labour  market, 

The  German  2012  stability  programme  plans  the  deficit  to  remain  at  1%  of 
GDP in 2012 and to drop to ½% of GDP in 2013, which is broadly in line with 
the  Commission  services'  forecast  of  a  deficit  of  0.9%  of  GDP  in  2012  and 
0.7%  of  GDP  in  2013.  Thus,  the  deficit  is  set  to  remain  well  below  the 
reference  value  of  3%  of  GDP.  In  addition,  according  to  the  Commission 
services'  forecast,  the  cyclically-adjusted  budget  deficit,  net  of  one-off  and 
other temporary measures, will be 0.4% of GDP in 2012 and 0.3% of GDP in 
2013.  Meanwhile,  the  growth  rate  of  government  expenditure  net  of 
the  expenditure 
discretionary  revenue  measures 
benchmark as specified in Article 5(1) of 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  in  2012,  while 
respecting it in 2013. 

is  forecast 

to  exceed 

The  debt-to-GDP  ratio  surged  by  8.6  percentage  points  to  83.0%  in  2010, 
notably due to the transfer of impaired assets to "bad banks" in the context of 
financial sector stabilisation. After having dropped to 81.2% of GDP in 2011, 
gross debt is to increase again to 82.0% of GDP in 2012 as a result of the euro 
area  stabilisation  measures,  according  to  the  stability  programme,  before 
falling to 80% of GDP in 2013 and remaining on a downward path thereafter. 
This is broadly in line with the Commission services' forecast of a debt-to-GDP 
ratio of 82.2% in 2012 and 80.7% in 2013, which does not consider potential 
gains from the winding-up of "bad banks". 

(6) 

5 

In accordance with Article 126(12) of the Treaty, a 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.  

In line with the “Specifications on the implementation of the Stability and Growth Pact and Guidelines 
on the format and content of Stability and Convergence Programmes”, as agreed by the Council on 24 
January 2012. See: 
http://ec.europa.eu/economy_finance/economic_governance/sgp/pdf/coc/code_of_conduct_en.pdf 

EN 

3 

   EN 

                                                 
 
(7) 

The Council recalls that, starting in the year following the correction of its excessive 
deficit,  Germany  is  in  a  transition  period  of  three  years  (2012-2014),  in  which  the 
requirement  under  the  debt  criterion  should  be  considered  fulfilled  if  the  country 
makes sufficient progress towards compliance with the debt reduction benchmark, in 
accordance with Article 2(1a) of Regulation (EC) No 1467/97. The fiscal adjustment 
planned by Germany in its stability programme is consistent with sufficient progress 
towards compliance with the debt reduction benchmark at the end of the transition.  

(8) 

In the view of the Council, the excessive deficit in Germany has been corrected and 
Decision 2010/285/EU should therefore be abrogated, 

HAS ADOPTED THIS DECISION: 

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

Article 1 

Decision 2010/285/EU is hereby abrogated. 

Article 2 

Article 3 

This Decision is addressed to the Federal Republic of Germany. 

Done at Brussels, 

For the Council 
The President 

EN 

4 

   EN