Saturday 19 June 2010

Excessive deficit procedure: Finland

The previous blog post, Excessive deficit procedure: Denmark, looked at the relevant summaries of EU legislation and found that they need to be updated.

We check if the Directorate-General for Economic and Financial Affairs (DG ECFIN) offers updated introductory materials.

The European Union is about to start an excessive deficit procedure (EDP) concerning Finland, one of the three countries in the latest batch.

We offer links to the relevant documents, and assess the timely publication of legal materials on the Eur-Lex portal in this case.


The European Commission’s Directorate-General for Economic and Financial Affairs (DG ECFIN) offers a number of web pages:

The web page Stability and Growth Pact describes the basic features, and it explains the meaning of the preventive arm and the dissuasive arm (the excessive deficit procedure, EDP) of the SGP, including possible sanctions for euro area members.

The web page Stability and convergence programmes offers an overview of the annual programmes and how they are monitored. It could be clearer with regard to the different programmes: Eurozone countries prepare stability programmes (to maintain fiscal balance), whereas the other member states are seen as on a course towards fulfilment of the criteria for euro adoption, and they submit convergence programmes.

Excessive deficit procedure is a web page, which briefly explains the EDP and mentions the trigger (reference) values: the deficit-to-GDP ratio of 3% and the debt-to-GDP ratio of 60%. The possibility to impose sanctions on euro area members, but not on countries still on the convergence path, could have been explained more clearly.

There is also a web page Relevant legal texts and guidelines, which is helpful for those who want to dig deeper.


Subject to the remarks already made, my impression is that the introductory web pages offered by DG ECFIN are adequate to the needs of the general reader, who wants information at a glance. The pages have been updated fairly recently, and they take account of the Lisbon Treaty.

ECFIN offers few thrills of web design, but those who want to find news and more detailed factual information are fairly well served.

Excessive deficit procedure Finland

We can find updated information about the excessive deficit procedure initiated against Finland and two other countries on the ECFIN web pages.

However, for the sake of clarity and transparency, this blog argues that legal information concerning the European Union should be published centrally and in a timely manner on the legal portal Eur-Lex.

Formally, the Commission decided to institute the EDP regarding Finland on 15 June 2010. Three SEC documents have already been published on Eur-Lex (in the working languages of the Commission: English, French and German):

COMMISSION OPINION on the existence of an excessive deficit in Finland; Brussels, 15.6.2010 SEC(2010) 745 final

Proposal for a COUNCIL DECISION on the existence of an excessive deficit in Finland; Brussels, 15.6.2010 SEC(2010) 746 final

Recommendation for a COUNCIL RECOMMENDATION with a view to bringing an end to the situation of an excessive government deficit in Finland; Brussels, 15.6.2010 SEC(2010) 747 final


The Commission recommends that the Council adopts the following recommendation addressed to the Republic of Finland:

(1) Recognising that Finland’s budgetary position in 2010 resulted from measures amounting to 1.8% of GDP in 2009 and 1.1% in 2010, which is an adequate response to the downturn and were in line with the European Economic Recovery Plan principles, as well as from the free play of automatic stabilisers, the Finnish authorities should put an end to the present excessive deficit situation at the latest by 2011.

(2) The Finnish authorities should bring the general government deficit below 3% of GDP in a credible and sustainable manner. Specifically, to this end, the Finnish authorities should:

(a) implement the fiscal measures in 2010 as envisaged in the latest update of the stability programme, while ensuring that the planned breach of the 3%-of-GDP reference value would remain contained and temporary;

(b) ensure a fiscal effort of at least ½% of GDP in 2011;

(c) specify measures to ensure that the planned correction of the excessive deficit in 2011 is secured.

(3) The Council establishes the deadline of [13 January 2011] for the Finnish government to take effective action to specify the measures that will be necessary to progress towards the correction of the excessive deficit. The assessment of effective action will take into account economic developments compared with the economic outlook in the Commission services' spring 2010 forecast.

The Finnish authorities should report on progress made in the implementation of these recommendations in a separate chapter in the forthcoming updates of the stability programme until the abrogation of the excessive deficit procedure.

Ralf Grahn

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