Updated convergence programme of United Kingdom, 2006/07-2011/12 - Main contents
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official title
Council opinion of 27 February 2007 on the updated convergence programme of United Kingdom, 2006/07-2011/12| Legal instrument | Opinion |
|---|---|
| Original proposal | SEC(2007)191  |
| CELEX number i | 32007A0329(06) |
| Document | 27-02-2007 |
|---|---|
| Publication in Official Journal | 29-03-2007; OJ C 72 p. 20-23 |
| End of validity | 31-12-9999 |
29.3.2007 |
EN |
Official Journal of the European Union |
C 72/20 |
COUNCIL OPINION
of 27 February 2007
on the updated convergence programme of United Kingdom, 2006/07-2011/12
(2007/C 72/06)
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(3) thereof,
Having regard to the recommendation of the Commission,
After consulting the Economic and Financial Committee,
HAS DELIVERED THIS OPINION:
(1) |
On 27 February 2007 the Council examined the updated convergence programme of the United Kingdom, which covers the period from financial year 2006/07 to financial year 2011/12 (2). |
(2) |
The programme contains two macroeconomic scenarios: a central scenario and an alternative scenario which is based on trend growth a quarter percentage point lower than in the central scenario. The projections for the public finances in the update of the convergence programme are based on the latter scenario, which is designed to be more cautious than the central scenario and is considered the reference scenario for this assessment. It envisages real GDP growth of 2 % in 2006 and 2007, easing to 2
% on average over the rest of the programme period. Based on currently available information, the programme appears to be based on plausible growth assumptions. The projections for inflation, which is expected to decline from 2
% in 2006 to 2 % from 2007 onwards, appear to be on the low side in the short term, in the light of more recently published outturns, but otherwise plausible. |
(3) |
For 2006/07, the general government deficit is estimated at 3,0 % of GDP in the Commission services' autumn 2006 forecast. The current update of the convergence programme estimates a deficit of 2,8 % of GDP for the same year, which implies recent trends, showing robust growth in revenues and slower growth in expenditure, being maintained in the remaining months of the financial year. |
(4) |
The key objectives for fiscal policy as identified in the convergence programme update are to ensure long-term sustainability, intra- and intergenerational fairness and, subject to this, to support monetary policy, in particular by allowing the automatic stabilisers to smooth the path of the economy. The programme projects a reduction of the deficit below 3 % of GDP by 2006/07 (2,8 %) and to 1,4 % of GDP by the end of the projection period in 2011/12. The primary balance, estimated as a deficit of 0,6 % of GDP in 2005/06, is expected to return to balance by 2008/09 and to reach a surplus of 0,7 % of GDP by 2011/12. The budgetary adjustment over the projection period is equally distributed between revenues and expenditure. The increase of the revenue ratio is expected to take place in the first two years of the projection period, partly driven by discretionary measures, while significant adjustment on the expenditure side is planned to take place from 2008/09, through a moderation in current expenditure growth. Public investment in the definition used in the convergence programme (3) is planned to stabilise at 2
% of GDP from 2006/07 so that from 2007/08 the deficit is projected to be used entirely to fund public investment. The adjustment path is broadly in line with the one projected in the 2005 update, against a more favourable macroeconomic outlook in the short term. |
(5) |
Calculated according to the commonly agreed methodology, the structural balance (i.e. the cyclically-adjusted balance net of one-off and other temporary measures) is projected to improve from 2
% of GDP in 2006/07 to about 1
% of GDP in the final programme year, 2011/12. On the basis of... |
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