European Union (EU) Stability Pact

The European procedure in the event of an excessive deficit

According to the Treaty establishing the European Community, the member states of the EU are obliged to avoid excessive government deficits (Article 104). That obligation was confirmed by the European Stability and Growth Pact when the EURO was introduced as a common currency in the participating member states. If certain reference values are exceeded in a member state, the excessive deficit procedure, as it is called, is triggered, at the end of which fines amounting to billions may have to be paid.
The reference values to be observed are specified in the Protocol on the excessive deficit procedure annexed to the Treaty establishing the European Community:

3% for the ratio of government deficit to gross domestic product at market prices;
60% for the ratio of government debt to gross domestic product at market prices.

Data based on the European System of Integrated Economic Accounts (ESA) have to be used for the purpose.

More specific implementation provisions regarding the data for the Protocol on the excessive deficit procedure are provided by Council Regulation European Communities (EG) No 479/2009 (only in German), last amended by Council Regulation European Union (EU) No 679/2010. Accordingly, the annual data required for the excessive deficit procedure have to be reported to the European Commission before 1 April and before 1 October of a year. The data are checked by the European Commission (Eurostat) and then published.
The corresponding Eurostat Press release and detailed explanations on the methods used for compilation of national accounts net lending (+) net borrowing (-) can be found in subsequent documents.

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