Communication: Assessment of action taken by the United Kingdom with a view to bringing an end to the situation of excessive government deficit

On 19 June 2015, the Council issued a recommendation to the United Kingdom with a view to bringing an end to the excessive deficit situation by 2016-17. The United Kingdom was recommended to reach a headline deficit of 4.1% of GDP in 2015-16 and of 2.7% of GDP in 2016-17. Based on the macroeconomic forecast underlying the Council recommendation, this was considered consistent with an improvement in the structural balance of 0.5% of GDP in 2015-16 and 1.1% in 2016-17. The Council did not require additional measures other than those already incorporated into all the UK government budgets and autumn statements up to and including the 2015 budget.

In accordance with Article 3(4a) of Council Regulation (EC) No 1467/97, the Council established the deadline of 15 October 2015 for the UK to report in detail on action taken on its consolidation strategy. At the established deadline, the UK authorities submitted a report to the Commission highlighting the measures taken to achieve the targets set by the Council. The Commission has examined the budgetary strategy of the UK, based on the information included in the report on action taken and the economic forecast of the Office for Budget Responsibility (OBR), in order to assess whether the UK has complied with the Council recommendation of 19 June 2015.

The report on action taken submitted by the United Kingdom confirms the plan of the UK government to correct the excessive deficit by 2016-17, the deadline set by the Council, and provides details on the measures underpinning the budgetary strategy. Additional measures were not necessary to comply with the Council recommendation, however, extra measures were announced at the July budget, which are also included in the report on action taken.

Overall, based on the information available, the general government deficit is expected to reach 3.9% of GDP in 2015-16 and 2.4% in 2016-17, in line with the targets recommended by the Council. The improvement in the structural balance, as estimated by the Commission based on the autumn forecast of 0.7% of GDP in 2015-16 and 1.3% of GDP in 2016-17, also appears in line with the targets of 0.5% of GDP and 1.1% of GDP, respectively.

According to the methodology for assessing effective action, as the UK is compliant with the headline deficit targets and the underlying improvements in the structural balance as recommended over both 2015-16 and 2016-17, the Commission considers that the procedure be put in abeyance.

• Primary Source

EUR-Lex: SWD(2015)615: Analysis of the budgetary situation in the United Kingdom http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=SWD:2015:615:FIN

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