Luxembourg, 02/06/2004 (Agence Europe) - The Economy and Finance Ministers of the European Union (EU) Member States adopted without difficulty, on Wednesday in Luxembourg, a decision noting the existence of excessive public deficit in the Netherlands (3.2% of GDP in 2003). In the recommendations that accompany this decision of the Ecofin Council, the Netherlands is invited to remedy the situation in 2005 at the latest.
The Netherlands have until 2 October 2004 (i.e. four months in conformity with the procedures in force) to adopt correcting measures for the budget 2005. According to the text of the Council recommendations, such measures, which are mainly of a structural kind, should represent at least half a percentage point of GDP. Also, the Netherlands should also ensure that the effort made allows budgetary balance to be achieved or a surplus to be created. They should, to achieve this, reduce the structural deficit by at least 0.5 percentage points of GDP annually, even after the end of the excessive deficit situation.
Council recommendations are identical (in the effort required) to European Commission proposals adopted on 19 May. Commissioner Joaquin Almunia recalled at the Eurogroup meeting the day before that the Dutch authorities had already adopted economy measures representing the value of 0.6 percentage points of GDP.
He said that, according to the Commission, new measures this year (2004) could be counter-productive in a low growth context. Additional measures, however, are required in 2005 to guarantee at this date that the public deficit of the country falls below the reference value of 3% of GDP.
Discussions on implementation of the procedures of the Stability and Growth Pact promise to be far more turbulent and complex early July. During its next meeting, the Ecofin Council should take a stance on early warning procedure initiated against Italy and on the procedures for excessive deficit against Greece and six of the ten new EU Member States (Poland, Hungary, Czech Republic, Slovakia, Cyrpus and Malta).