Decision 2017/984 - Council Decision 2017/984 giving notice to Spain to take measures for the deficit reduction judged necessary in order to remedy the situation of excessive deficit - Main contents

EN

Official Journal of the European Union

L 148/38

According to Article 126 of the Treaty on the Functioning of the European Union (TFEU), Member States are to avoid excessive government deficits.

The Stability and Growth Pact is based on the objective of sound government finances as a means of strengthening the conditions for price stability and for strong sustainable growth conducive to employment creation. The Stability and Growth Pact includes Council Regulation (EC) No 1467/97 (1), which was adopted in order to further the prompt correction of excessive general government deficits.

On 27 April 2009, the Council decided, in accordance with Article 104(6) of the Treaty establishing the European Community (TEC), that an excessive deficit existed in Spain and issued a recommendation to correct the excessive deficit by 2012 at the latest, in accordance with Article 104(7) of that Treaty. Since then, the Council has issued three new recommendations to Spain (on 2 December 2009, 10 July 2012 and 21 June 2013) on the basis of Article 126(7) TFEU, which extended the deadline for correcting the excessive deficit to 2013, 2014 and 2016 respectively. In all three recommendations, the Council considered that Spain had taken effective action, but unexpected adverse economic events with major unfavourable consequences for government finances had occurred (2).

According to Article 126(8) TFEU, the Council decided on 12 July 2016 that Spain had not taken effective action in response to the Council Recommendation of 21 June 2013.

According to Article 10(2) of Regulation (EC) No 1467/97, if action by a participating Member State is not being implemented or, in the Council's view, is proving to be inadequate, the Council shall immediately take a decision under Article 126(9) TFEU.

The Commission has updated its 2016 spring forecast with information available up to 19 July 2016. On this basis, the real GDP growth forecast for 2016 has been revised upwards by 0,3 percentage points in comparison to the spring forecast, to 2,9 %, and downwards for 2017 (2,3 % vs. 2,5 % in spring). For 2018, real GDP is forecast to grow by 2,1 %. This compares to growth of 3,2 % in 2015. Economic growth is therefore set to ease but to remain robust, still benefitting from reforms undertaken in response to the crisis and the successful completion of the financial assistance programme. The recovery continues to be accompanied by strong job creation, in a context of continued wage moderation and benefitting from the labour market reforms. Low oil prices also support growth. At the same time, inflation is expected to be — 0,3 % in 2016. There are, however, downside risks to the growth forecast, especially as from 2017, related among others, to the outcome of the referendum in the United Kingdom on its membership of the Union, which has increased uncertainty, with potential negative implications for trade and domestic demand.

According to the updated Commission 2016 spring forecast, the general government deficit is expected to narrow to 4,6 % of GDP in 2016, 3,3 % of GDP in 2017 and 2,7 % of GDP in 2018 (compared to Stability Programme targets of 3,6 %, 2,9 % and 2,2 % of GDP in 2016, 2017 and 2018, respectively and a projected deficit outcome of 3,9 % of GDP in 2016 and 3,1 % of GDP in 2017 in the spring forecast)....