UK given until 2007 to bring public deficit below 3% ceiling

The Council's recommendation provides the UK with six months to present corrective action, and requires the excessive deficit to be brought to an end by the 2006-07 financial year at the latest. It calls for an improvement of 0.5% of GDP in the structural balance between the 2005-06 and 2006-07 financial years. In 2003-04 and in 2004-05, the UK deficit was 3.2% of GDP. The Commission's latest forecasts estimate that it will be as high as 3.4% in 2005-06 and stay above the 3% ceiling in 2006-07 (see EurActiv 9 January 2006). In reality, member states can only recommend that the UK reduces its deficit below the 3% ceiling because, not being a member of the eurozone, the country is not subject to fines. Meanwhile, according to the Financial Times, Economic and Monetary Affairs Commissioner Joaquin Almunia reacted to the news that France was predicting it would comply with the 3% deficit ceiling by 2005 by saying that he “was pleased to hear about the more optimistic figures”. The newspaper also reported that the Commission will make up its mind on February 1 whether or not to continue with disciplinary action against Germany under the rules of the Stability and Growth Pact.