Recommendation for a COUNCIL DECISION abrogating Decision 2009/414/EC on the existence of an excessive deficit in France
Date: 2018-05-23
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: France, budget deficit, budget policy, gross domestic product, public debt, public expenditure, public finance, stability pact

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   EUROPEAN COMMISSION  Brussels, 23.5.2018  COM(2018) 433 final Limited to Cabinets - Embargo until adoption Recommendation for a COUNCIL DECISION abrogating Decision 2009/414/EC on the existence of an excessive deficit in France  
 
 
Recommendation for a 

COUNCIL DECISION 

abrogating Decision 2009/414/EC on the existence of an excessive deficit in France 

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) 

(4) 

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On  27  April  2009,  following  a  recommendation  from  the  Commission,  the  Council 
decided, by Decision 2009/414/EC1, in accordance with Article 126(6) of the Treaty, 
that  an  excessive  deficit  existed  in  France.  The  Council  noted  that  the  general 
government  deficit  notified  for  2008  was  3.2%  of  GDP,  thus  above  the  3%-of-GDP 
Treaty reference value. The general government gross debt (which had been above the 
60%-of-GDP Treaty reference value since 2003) was planned to reach 66.7% of GDP 
in 2008. 

On the same date, in accordance with Article 126(7) of the Treaty and Article 3(4) of 
Regulation  (EC)  No  1467/972,  the  Council,  based  on  a  recommendation  from  the 
Commission,  issued  a  recommendation  to  France  with  a  view  to  bringing  the 
excessive  deficit  situation  to  an  end  by  2012  at  the  latest3.  The  Council  also  set  a 
deadline of 27 October 2009 for effective action to be taken. 

Thereafter  the  Council  addressed  a  new  recommendation  to  France  on  2  December 
2009  on  the  basis  of  Article  126(7)  of  the  Treaty,  which  extended  the  deadline  for 
correcting the excessive deficit to 2013. The Council considered that France had taken 
effective  action,  but  unexpected  adverse  economic  events  with  major  unfavourable 
consequences for government finances had occurred.  

On 21 June 2013, on the basis of Article 126(7) of the Treaty, the Council addressed a 
new  recommendation  to  France,  which  extended  the  deadline  for  correcting  the 
excessive deficit to 2015. The Council considered that the available evidence did not 
allow  to  conclude  on  no  effective  action,  but  unexpected  adverse  economic  events 
with major unfavourable consequences for government finances had occurred.  

Council Decision 2009/414/EC of 27 April 2009 on the existence of an excessive deficit in France (OJ 
L 135, 30.5.2009, p. 19). 
Council Regulation (EC) No 1467/97 of 7 July 1997 on speeding up and clarifying the implementation 
of the excessive deficit procedure (OJ L 209, 2.8.1997, p. 6). 
All  documents  related 
https://ec.europa.eu/info/business-economy-euro/economic-and-fiscal-policy-coordination/eu-
economic-governance-monitoring-prevention-correction/stability-and-growth-pact/corrective-arm-
excessive-deficit-procedure/ongoing-excessive-deficit-procedures/france_en#ongoing-procedure. 

the  excessive  deficit  procedure  of  France  can  be  found  at: 

to 

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(5) 

(6) 

(7) 

(8) 

(9) 

Thereafter, on 10 March 2015 the Council under Article 126(7) of the Treaty issued a 
new recommendation to France with a view to bringing an end to the excessive deficit 
situation by 2017. The Council established the deadline of 10 June 2015 for France to 
report in detail on action taken. 

On 1 July 2015, the Commission concluded that the headline deficit targets for France 
were  expected  to  be  met  both  in  2015  and  2016,  while  the  projected  fiscal  effort, 
according to all metrics, was projected to fall short of the recommended ones in 2015 
and 2016. Therefore, according to the methodology for assessing effective action, the 
Commission considered that the procedure was to be held in abeyance.  

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 that 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 
Regulation (EC) No 479/20094.  

The  Council  should  take  a  decision  to  abrogate  a  decision  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  3%-of-GDP  Treaty  reference  value  over  the  forecast 
horizon5. 

Based on data provided by the Commission (Eurostat) in accordance with Article  14 
of  Regulation  (EC)  No  479/2009,  following  the  April  2018  notification  6  by  France, 
the 2018 Stability Programme and the Commission 2018 spring forecast, the following 
conclusions are warranted: 

– 

– 

After  reaching  3.4%  of  GDP  in  2016,  the  general  government  deficit  was 
reduced to 2.6% of GDP in 2017. As compared to the 2017 budget targets, the 
deficit  reduction  in  that  year  was  mainly  driven  by  the  buoyancy  of  tax 
revenues (0.7% of GDP), especially VAT and corporate taxes.  

The Stability Programme for 2018-2022, submitted by the French government 
on 25 April 2018, plans  the general government  deficit  to decline to  2.3%  of 
GDP  in  2018  and  to  slightly  increase  to  2.4%  of  GDP  in  2019.  The 
Commission  2018  spring  forecast  projects  a  deficit  of  2.3%  of  GDP  in  2018 
and  2.8%  of  GDP  in  2019,  thus  remaining  below  the  3%-of-GDP  Treaty 
reference value over the forecast horizon.  

– 

The  structural  balance,  which  is  the  general  government  balance  adjusted  for 
the economic cycle and net of one-off and other temporary measures, improved 

4 

5 

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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). 
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”,  adopted  by  the  Economic  and 
Financial Committee on 15 May 2017, available at: 
http://data.consilium.europa.eu/doc/document/ST-9344-2017-INIT/en/pdf 
Eurostat  has  expressed  a  reservation  on  the  quality  of  the  data  reported  by  France.  Firstly,  Eurostat 
considers  that  the  Agence  Française  de  Développement  should  be  classified  inside  the  general 
government sector, which would result in an increase in government debt. Secondly, Eurostat considers 
that the capital injection by the State into AREVA (0.1% of GDP) in 2017 should be treated as a capital 
transfer, with an impact on the deficit. 

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by  0.5%  of  GDP  in  2017.  The  accumulated  improvement  in  the  structural 
balance since 2015 amounted to 0.7% of GDP.  

– 

The gross government debt-to-GDP increased to 97.0% in 2017, from 96.6% in 
2016, mainly due to the debt-increasing stock-flow adjustments as the primary 
deficit and interest payments were broadly offset by the debt-reducing impact 
of real growth and inflation. The Commission 2018 spring forecast projects the 
debt ratio to decrease to 96.4% in 2018 and 96.0% in 2019 mainly due to high 
nominal growth that outweighs the primary deficits and interest payments.  

(10) 

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. 

(11) 

In  the  view  of  the  Council,  the  excessive  deficit  in  France  has  been  corrected  and 
Decision 2009/414/EC should therefore be abrogated. 

(12)  As  from  2018,  the  year  following  the  correction  of  the  excessive  deficit,  France  is 
subject  to  the  preventive  arm  of  the  Stability  and  Growth  Pact  and  should  progress 
towards  its  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:  

Article 1 

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

Decision 2009/414/EC is hereby abrogated. 

Article 2 

This Decision is addressed to the French Republic. 

Done at Brussels, 

Article 3 

For the Council 
The President 

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