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Summaries of EU Legislation

Stability and Growth Pact enforcement

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Stability and Growth Pact enforcement

 

SUMMARY OF:

Regulation (EU) No 1173/2011 — the effective enforcement of budgetary surveillance in the euro area

WHAT IS THE AIM OF THE REGULATION?

It sets out a gradual system of sanctions for euro area countries that either fail to comply with the Stability and Growth Pact or manipulate their economic statistics.

The rules are mainly designed to encouragegovernments to stick to their medium-term budgetary goals.

KEY POINTS

Euro area countries which:

  • fail to act toto correct a significant deviation of their structural budget deficit from what is required to achieve their medium-term objective, following a warning from the European Commission, may have to lodge with the Commission an interest-bearing deposit equivalent to 0.2% of their previous year’s gross domestic product (GDP);
  • are deemed to be in excessive deficit by the Council, may have to lodge with the Commission a non-interestbearing deposit equivalent to 0.2% of their previous year’s GDP;
  • do not act effectivelyto correct an excessive deficit, may be fined 0.2% of their previous year’s GDP.

The procedures for adopting the abovementioned sanctions are identical. Following a Council decision about the lack of effective action or establishing the existence of an excessive deficit, the Commission proposes the relevant sanction within 20 days. This is adopted unless a qualified majority of euro area countries rejects it. The Commission may recommend the Council reduce or cancel the sanction in the light of exceptional economic circumstances or following the reasoned request by the country concerned.

The Council, following a recommendation from the Commission, may also fine a euro area country up to 0.2% of its GDP if it intentionally, or by serious negligence, misrepresents its deficit and debt data.

Income generated from fines and non-interest-bearing deposits is transferred to the European Stability Mechanism to help euro area members requiring financial assistance.

The Commission, publishes a report every 5 years, starting from 14 December 2014, evaluating the:

  • effectiveness of this regulation in tackling potential risks to the proper functioning of the monetary union;
  • progress made in ensuring closer coordination and convergence of national economic policies and performance.

FROM WHEN DOES THE REGULATION APPLY?

It applies from 13 December 2011.

BACKGROUND

The regulation is one of 6 pieces of legislation (known as the Six-pack) designed to strengthen economic governance in the EU, and more specifically, in the euro area. The others are:

For more information, see:

MAIN DOCUMENT

Regulation 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)

RELATED DOCUMENTS

Regulation 1174/2011 of the European Parliament and of the Council of 16 November 2011 on enforcement measures to correct excessive macroeconomic imbalances in the euro area (OJ L 306, 23.11.2011, pp. 8-11)

Regulation 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances (OJ L 306, 23.11.2011, pp. 25-32)

Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States (OJ L 306, 23.11.2011, pp. 41-47)

Council Regulation 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (OJ L 209, 2.8.1997, pp. 1-5)

Successive amendments to Regulation (EC) No 1466/97 have been incorporated into the original document. This consolidated version is of documentary value only.

Council Regulation 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)

See consolidated version.

last update 02.02.2018

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