Recommendation for a COUNCIL DECISION abrogating Decision 2008/713/EC on the existence of an excessive deficit in the United Kingdom
Date: 2017-11-22
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: United Kingdom, budget deficit, budgetary equilibrium, gross domestic product, public debt, public expenditure, public finance, stability programme

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   EUROPEAN COMMISSION  Brussels, 22.11.2017  COM(2017) 801 final  Recommendation for a COUNCIL DECISION abrogating Decision 2008/713/EC on the existence of an excessive deficit in the United Kingdom  
 
 
Recommendation for a 

COUNCIL DECISION 

abrogating Decision 2008/713/EC on the existence of an excessive deficit in the United 
Kingdom 

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) 

On  8  July  2008,  following  a  recommendation  from  the  Commission,  the  Council 
decided,  by Council  Decision  2008/713/EC  in  accordance with  Article  104(6)  of the 
Treaty establishing the European Community, that an excessive deficit existed in the 
United Kingdom.1 The Council noted that, according to the EDP data notified by the 
United  Kingdom  authorities  in  March  2008,  the  United  Kingdom's  general 
government deficit in 2008-09 was expected to reach 3.2 % of GDP, thus exceeding 
the 3 % of GDP Treaty reference value. Furthermore, following the publication of the 
March  2008  budget,  a  policy  announcement  on  13  May  2008  reducing  personal 
income  tax  in  2008-09  was  expected  to  further  increase  the  planned  deficit  in  that 
financial year. Adding this measure to the Commission 2008 spring forecast implied a 
deficit  of  3.5  %  of  GDP  in  2008-09.  The  excessive  deficit  was  also  not  considered 
temporary as the Commission forecast, on the basis of unchanged policies, estimated a 
deficit  in  2009-10  of  3.3  %  of  GDP.  The  Council  further  noted  that  the  general 
government debt ratio remained well below the 60 % reference value, although it was 
projected to be on a rising trend up to 2009-10.  

(2) 

On the same date, in accordance with Article 104(7) of the Treaty and Article 3(4) of 
Council Regulation (EC) No 1467/97, the Council, based on a recommendation from 
the Commission, addressed a Recommendation to the United Kingdom with a view to 
bringing  the  excessive  deficit  situation  to  an  end  by  financial  year  2009-10  at  the 
latest.  The  Council  also  set  a  deadline  of  8  January  2009  for  effective  action  to  be 
taken.  

(3) 

In  accordance  with  Article  104(8)  of  the  Treaty,  the  Council  decided,  on  27  April 
2009,  that  the  United  Kingdom  had  not  taken  effective  action  in  response  to  the 
Council Recommendation of 8 July 2008.2 

1  Council Decision 2008/713/EC of 8 July 2008 on the existence of an excessive deficit in the United Kingdom 

(OJ L 238, 5.9.2008, p. 5). 

2  Council  Decision  2009/409/EC  of  27  April  2009  establishing,  in  accordance  with  Article  104(8)  of  the 
Treaty,  whether  effective  action  has  been  taken  by  the  United  Kingdom  in  response  to  the  Council 
Recommendation of 8 July 2008 pursuant to Article 104(7) (OJ L 132, 29.5.2009, p. 11). 

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(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

Recognising  that  the  United  Kingdom's  budgetary  position  in  2009-10  resulted  from 
the implementation of measures amounting to around 1.5 % of GDP, which were an 
appropriate response  to  the  European  Economic  Recovery  Plan,  and  the  free  play  of 
automatic  stabilisers,  on  2  December  2009 
issued  a  revised 
Recommendation  under  Article  126(7)  of  the  TFEU,  recommending  that  the  United 
Kingdom  put  an  end  to  the  excessive  deficit  situation  by  2014-15.  Specifically,  in 
order  to  bring  the  general  government  deficit  below  3  %  of  GDP  in  a  credible  and 
sustainable  manner,  the  United  Kingdom  was  recommended  to  ensure  an  average 
annual  fiscal  effort  of  1¾  %  of  GDP  between  2010-11  and  2014-15.  In  its 
Recommendation  of  2  December  2009,  the  Council  established  a  deadline  of  2  June 
2010 for effective action to be taken in line with the Article 3(4) of Regulation (EC) 
No 1467/97.  

the  Council 

On  6  July  2010,  the  Commission  concluded  that,  based  on  the  Commission  2010 
spring forecast, the United Kingdom had taken effective action in compliance with the 
Council Recommendation of 2 December 2009 under Article 126(7) of the Treaty. 

On 19 June 2015, in accordance with Article 126(8) of the Treaty, the Council decided 
that  the  United  Kingdom  had  not  taken  effective  action  in  response  to  the  Council 
Recommendation of 2 December 2009.3 The Council noted that the United Kingdom 
had experienced a large fall in real GDP growth as a result of the global economic and 
financial  crisis  in  2008  and  2009,  which  had  also  affected  its  public  finances.  The 
United Kingdom had subsequently implemented a consolidation plan and the general 
government deficit had fallen, as a percentage of GDP, each year between the 2009-10 
and  2014-15  financial  years.  In  contrast,  the  general  government  debt  ratio  had 
continued to increase over this period, driven mainly by the headline deficit, but also 
by  financial  sector  interventions.  The  Council  concluded  that,  despite  a  fiscal 
consolidation programme being set out and implemented, the United Kingdom had not 
put an end to its excessive deficit by 2014-15. Furthermore, the United Kingdom had 
not  adhered  to  the  average  annual  fiscal  effort  of  1¾  %  of  GDP  that  had  been 
recommended by the Council on 2 December 2009. 

On the same date, in accordance with Article 126(7) of the Treaty and Article 3(4) of 
Council Regulation (EC) No 1467/97, the Council, based on a recommendation from 
the Commission, addressed a Recommendation to the United Kingdom to correct the 
excessive  deficit  by  financial  year  2016-17.  Specifically,  the  United  Kingdom  was 
recommended to  reach  a headline deficit  of 4.1 %  of  GDP  in  2015-16 and 2.7 %  of 
GDP  in  2016-17,  which  was  projected  to  be  consistent  with  delivering  an 
improvement in the structural balance of 0.5 % of GDP in 2015-16 and 1.1 % of GDP 
in 2016-17, based on the updated Commission 2015 spring forecast.  

On  16  November  2015,  the  Commission  concluded  that  the  United  Kingdom  had 
taken effective action towards correcting the excessive deficit by financial year 2016-
17, as recommended by the Council on 19 June 2015. 

In accordance with Article 4 of the Protocol (No 12) on the excessive deficit procedure 
annexed  to  the  Treaty  on  the  European  Union  and  to  the  TFEU,  the  Commission 
provides the data for the implementation of the procedure. As part of the application of 
that  Protocol,  Member States  are to notify data on government deficits and debt  and 

3  Council  Decision  2015/1098  of  19  June  2015  establishing  that  no  effective  action  has  been  taken  by  the 
United Kingdom in response to the Council Recommendation of 2 December 2009 (OJ L 180, 8.7.2015, p. 
1). 

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other associated variables twice a year, namely before 1 April and before 1 October, in 
accordance with Article 3 of Council Regulation (EC) No 479/2009.4 

(10)  The  Council  takes  decisions  to  abrogate  decisions  on  the  existence  of  an  excessive 
deficit  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 Treaty reference value of 3 % of GDP over the forecast 
horizon.5 

(11)  Based on data provided by the Commission (Eurostat) in accordance with Article 14 
of  Regulation  (EC)  No  479/2009,  following  the  2017  Convergence  Programme,  the 
September  2017  notification  by  the  United  Kingdom,  and  the  Commission  2017 
autumn forecast, the following conclusions are justified: 

– 

– 

– 

– 

in  2015-16  and  2.3  % 

The  United  Kingdom  has  met  the  recommended  general  government  deficit 
targets in recent years. After peaking at 10 % of GDP in 2009-10, the nominal 
general  government  deficit  has  followed  a  steadily  declining  trend,  falling  to 
the  Council 
4 % 
Recommendation of 19 June 2015. Fiscal consolidation undertaken during the 
period  has  largely  been  expenditure  based,  with  total  current  expenditure 
falling from 42.9 % of GDP in 2009-10 to 38 % of GDP in 2016-17. A rise in 
the  government  revenue  ratio,  from  37.4  %  of  GDP  in  2009-10  to  38.6  %  of 
GDP in 2016-17, has also contributed, albeit to a lesser extent. 

in  2016-17, 

line  with 

in 

The  2016-17  Convergence  Programme,  submitted  by  the  United  Kingdom 
authorities  on  27  April  2017  and  covering  the  period  2016-17  to  2021-22, 
projected  an  increase  in  the  general  government  deficit  to  2.8  %  of  GDP  in 
2017-18  followed  by  a  fall  to  1.9 %  of  GDP  in  2018-19.  This  forecast  was 
based on a planned general government deficit of 2.7 % in 2016-17, as per the 
EDP data notified by the United Kingdom authorities in March 2017. Since the 
submission  of the Convergence Programme, the Office for National Statistics 
(ONS) has revised down its estimate of the general government deficit in 2016-
17  to  2.3  %  of  GDP.  While  the  United  Kingdom  authorities  did  not 
subsequently  publish  an  updated  forecast  for  the  general  government  deficit, 
the  Commission  2017  autumn  forecast  projects  deficits  of  2.5  %  in  2017-18, 
1.8  %  in  2018-19,  and  1.3  %  in  2019-20,  based  on  a  no-policy-change 
assumption. Thus, the deficit is set to remain below the Treaty reference value 
of 3 % of GDP over the forecast horizon. 

According to its 2017 autumn forecast, the Commission estimates the structural 
balance,  which  is  the  general  government  balance  adjusted  for  the  economic 
cycle  and  net  of  one-off  and  other  temporary  measures,  to  have  improved  by 
3.2 % of GDP between 2008-09 and 2016-17.  

The  United  Kingdom's  general  government  gross  debt  ratio  has  increased 
significantly  since  the  Council  decided,  on  8  July  2008,  that  an  excessive 
deficit  existed  in  the  United  Kingdom.  The  general  government  debt  ratio 
increased  from  41  %  of  GDP  in  2007-08  to  86.8  %  in  2016-17,  reflecting 

4  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 Community OJ L 145, 10.6.2009, p. 1. 

5 

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”  of  3  September  2012.  See: 
http://ec.europa.eu/economy_finance/economic_governance/sgp/pdf/coc/code_of_conduct_en.pdf 

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higher  nominal  general  government  deficits  as  well  as  financial  sector 
interventions  during  this  period.  According  to  the  Commission  2017  autumn 
forecast,  the debt-to-GDP ratio is  expected to  have  peaked in 2016-17 and to 
decrease gradually to 82.9 % of GDP in 2019-20. 

(12) 

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.  

(13) 

In  the  view  of  the  Council,  the  excessive  deficit  in  the  United  Kingdom  has  been 
corrected, and Decision 2008/713/EC should therefore be abrogated. 

(14)  As from 2017-18, which is the financial year following the correction of the excessive 
deficit,  the  United  Kingdom  is  subject  to  the  preventive  arm  of  the  Stability  and 
Growth  Pact  and  should  progress  towards  the  minimum  medium-term  budgetary 
objective at an appropriate pace, including respecting the expenditure benchmark, and 
comply with the debt criterion in accordance with Article 2(1a) of Regulation (EC) No 
1467/97, 

HAS ADOPTED THIS DECISION: 

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

Article 1 

Decision 2008/713/EC is hereby abrogated. 

Article 2 

Article 3 

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

Done at Brussels, 

For the Council 
The President 

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