WIREDGOV

The Council decided in July 2008 that an excessive deficit existed in the UK and issued recommendations to the country to correct the excessive deficit by the financial year 2009-10 at the latest.  The UK did not accomplish this, and the deficit peaked at 10.9% in 2009-10.

The Council recognised that the higher deficit resulted from the implementation of measures - amounting to around 1.5% of GDP - seen as an appropriate response to the European Economic Recovery Plan, and the impact of the economic cycle. Based on this, in December 2009 the Council issued a revised recommendation to the UK under Article 126(7), recommending that the country should correct the excessive deficit situation by 2014-15.

Why is the Commission recommending to the Council to decide that the UK has not taken effective action?

The UK's general government deficit stood at 5.2% of GDP in the financial year 2014-15, so - despite the fiscal consolidation programme set out and being implemented - the UK has not corrected the deficit by the deadline the Council has set. Moreover, the average annual fiscal effort is calculated to fall short of the 1¾% of GDP required by the Council.

This is why the Commission recommends to the Council to decide under Article 126 (8) that the UK has not taken effective action.

What is the next step?

The Commission proposes to the Council to recommend under Article 126 (7) that the UK puts an end to the present excessive deficit situation by 2016-17 at the latest.

The UK should reach a headline deficit of 4.1% of GDP in 2015-16 and 2.7% in 2016-17. Based on the Commission's 2015 spring forecast, this should be consistent with delivering improvements in the structural balance of 0.5% of GDP in 2015-16 and 1.1% in 2016-17.

Can the United Kingdom be fined for failing to correct the excessive deficit?

No, fines are only applicable for euro area Member States. The UK is also not subject to a possible suspension of the commitments or payments of European structural and investment funds.