To recall, under the Council Regulation 479/2009 on the application of the Protocol on the excessive deficit procedure, Member States are required to report to the Commission (Eurostat), twice a year, before 1 April and before 1 October, their planned and actual government deficits and levels of government debt.
This Regulation provides that “Eurostat is responsible, on behalf of the Commission, for assessing the quality of the data and for providing the data to be used within the context of the excessive deficit procedure (…)” Member States are, therefore, required to comply with accounting rules, particularly with the statistical principles set out in Regulation 223/2009 on European statistics. Eurostat assesses whether government operations, using new financial instruments, have an impact on governments deficit and debt.
In July 2010, the Council formally adopted, without discussion, a regulation amending Regulation (EC) No 479/2009 as regards the quality of statistical data in the context of the excessive deficit procedure. Taking into account the Greek situation and the lack of reliability of Greece’s public finance statistics, Member States have decided to allow Eurostat and the Commission interfering in matters of their competence. Eurostat is, therefore, entitled to examine Member States’ public accounts so it can verify data provided. Under the amended Regulation Eurostat has access to all “the information required for the purposes of the data quality assessment” and not just statistical information. Moreover, there would be more “regular statistical visits” and "in-depth methodological visits” in Member States. The methodological visits are, therefore, beyond the “purely statistical data” as their purpose will be to verify the public accounts.
On 26 April, Eurostat published government deficit and debt figures for all EU Member States (first 2011 notification), which are based on figures reported by EU Member States for the application of the excessive deficit procedure (EDP), for the years 2007-2010. According to Eurostat the government deficit to GDP ratio of the euro area decreased from 6.3% in 2009 to 6.0% in 2010 whilst in the EU27 decrease from 6.8% to 6.4%. The government debt to GDP ratio of the euro area increased from 79.3% in 2009 to 85.1% in 2010 while in the EU27 it increase from 74.4% to 80.0%. Eurostat notes that “In 2010 the largest government deficits in percentage of GDP were recorded in Ireland (-32.4%), Greece (-10.5%), the United Kingdom (-10.4%), Spain (-9.2%), Portugal (-9.1%) (…)”
Under Article 15 (1) of Council Regulation 479/2009, as amended, “The Commission (Eurostat) may express a reservation on the quality of the actual data reported by the Member States.” Eurostat has expressed a reservation on the quality of data reported by the UK, “due to uncertainties on the time of recording of military expenditure.” According to Eurostat “The United Kingdom does not record military expenditure on a delivery basis, as required by the relevant Eurostat Decision of 9 March 2006.”
Article 15 (2) of Council Regulation 479/2009, as amended, allows Eurostat to amend data reported by Member States if there is evidence that data reported do not comply with the quality requirements. The deficit date reported by the UK for the years 2007 to 2010 has been amended by Eurostat “for consistency of recording of UMTS licences proceeds in 2000.” Consequently, Eurostat has raised the UK’s deficits for the last four years. The deficit and debt data notified by the UK for the years 2008 to 2010 and for financial year 2010/2011 have also been amended by Eurostat “to ensure compliance with the Eurostat guidance note of 16 March 2011 on financial defeasance structures, with respect to Bradford & Bingley (B&B) and Northern Rock Asset Management (NRAM).” Hence, the UK deficit and debit figures have been increased.
In the meantime, on 27 April, a debate was held in the House of Commons on Section 5 of the European Communities (Amendment) Act 1993. Please read here Bill Cash's speech.
