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Reviewing euro area countries’ draft budgetary plans for 2015

This summary has been archived and will not be updated, because the summarised document is no longer in force or does not reflect the current situation.

Reviewing euro area countries’ draft budgetary plans for 2015

To improve economic policy coordination in the economic and monetary union, each year, the European Commission assesses the draft budgetary plans of countries in the euro area.

ACT

Communication from the Commission: 2015 draft budgetary plans: Overall assessment (COM(2014) 907 final of 28.11.2014).

SUMMARY

To improve economic policy coordination in the economic and monetary union, each year, the European Commission assesses the draft budgetary plans of countries in the euro area.

WHAT DOES THE COMMUNICATION DO?

Stemming from the stability and growth pact (SGP), this Commission communication:

assesses the overall fiscal position and direction of fiscal policies throughout the euro area;

gives its opinion on whether the draft budgetary plans (DBPs) for 2015 submitted by 16 euro area countries fulfil their recommendations under the SGP. Cyprus and Greece did not have to submit a draft budget, since these are already monitored in the context of their macroeconomic adjustment programmes.

KEY POINTS

Overall finding

The overall 2015 DBP review shows that:

after returning below 3 % of GDP in 2013 for the first time since 2008, the aggregate headline budget deficit for the 16 countries in the euro area should continue to fall to 2.6 % of GDP in 2014 and 2.2 % in 2015;

the aggregate debt ratio is expected to remain the same in 2015 as in 2014 (at 92.5 % of GDP). However, the Commission expects the aggregate debt-to-GDP ratio to rise from 93.1 % in 2014 to 93.6 % in 2015, instead of the stabilisation projected in the DBPs;

fiscal consolidation came to a halt in the 16 countries in 2014, and the Commission expects that fiscal policy will be broadly neutral (neither tightening nor loosening) in 2015;

the measures taken to reduce the tax burden on labour have moved in the right direction. Nevertheless, spending needs to be more growth friendly.

Country assessment

The Commission’s assessment of DBPs specifically focuses on their compliance with the SGP, which aims to ensure sound public finances in the European Union. The evaluation concluded that:

five countries (Germany, Ireland, Luxembourg, the Netherlands and Slovakia) presented DBPs that comply with the SGP provisions;

four countries (Estonia, Latvia, Slovenia and Finland) presented DBPs that were broadly compliant with the SGP provisions;

DBPs from seven countries (Belgium, Spain, France, Italy, Malta, Austria and Portugal) present a risk of non-compliance.

The Commission invites the latter two groups of countries to take the necessary measures within the national budgetary process to ensure their 2015 budget complies with the SGP.

In some cases, the risk of non-compliance has implications for possible steps under the excessive deficit procedure. In 2015, the Commission is to review its position concerning the obligations of France, Italy and Belgium under the SGP in the light of the finalisation of their budget laws.

BACKGROUND

Each year, euro area countries are required to submit to the Commission, by 15 October at the latest, their draft budgetary plans for the following year. This process results from legislation that aims to improve economic and fiscal policy coordination in the euro area (often known as the ‘Two-pack’), which entered into force in May 2013.

For more information, see the economic governance pages on the European Commission’s website.

Last updated: 20.05.2015

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