The corrective arm: the excessive deficit procedure

SUMMARY OF:

Council Regulation (EC) No 1467/97 — speeding up and clarifying the implementation of the excessive deficit procedure

SUMMARY

WHAT DOES THIS REGULATION DO?

The Stability and Growth Pact (SGP) is the cornerstone of EU budgetary discipline. The corrective arm of the pact governs the excessive deficit procedure (EDP) which underpins the prompt correction of excessively high public deficits or excessively high public debt.

The Regulation seeks to clarify and speed up the EDP under Article 126 of the Treaty on the Functioning of the European Union (TFEU).

When an EU country does not respect the budgetary discipline required by the SGP, it may become the subject of an EDP which includes several steps.

KEY POINTS

Initiating the procedure

Under the SGP, the EDP is triggered by deficit and debt criteria:

Stages of the procedure

Sanctions

Sanctions are imposed if the deficit is not reduced. For countries in the euro area, these sanctions are imposed on a gradual basis beginning with:

In addition, all EU countries (except the United Kingdom) may be subject to a suspension of commitments or payments of EU Structural and Investment Funds. Penalties are also imposed in cases of statistical manipulation.

Voting system

Decisions on most sanctions under the EDP are taken by reverse qualified majority. This means that a fine is deemed to be adopted unless the Council decides by qualified majority to reject it.

Moreover, the 25 countries which signed the Treaty on Stability, Coordination and Governance agreed to apply reverse qualified majority voting at an even earlier stage in the procedure, for example when deciding whether an EU country should be subject to an EDP.

SGP flexibility

In January 2015, the Commission published a Communication providing guidance to EU countries on making best use of the flexibility within the existing rules of the Stability and Growth Pact to encourage the effective implementation of structural reforms, promote investment and better take into account the economic situation of each EU country.

FROM WHEN DOES THE REGULATION APPLY?

It applies from 1 January 1999.

BACKGROUND

ACT

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, pp. 6-11)

The successive amendments to Regulation (EC) No 1467/97 have been incorporated into the original text. This consolidated version is of documentary value only.

RELATED ACTS

Regulation (EU) No 1173/2011 of the European Parliament and of the Council of 16 November 2011 on the effective enforcement of budgetary surveillance in the euro area (OJ L 306, 23.11.2011, pp. 1-7)

Communication from the Commission to the European Parliament, the Council, the European Central Bank, the Economic and Social Committee, the Committee of the Regions and the European Investment Bank: Making the best use of the flexibility within the existing rules of the Stability and Growth Pact (COM(2015) 12 final of 13.1.2015)

last update 22.02.2016