EUR-Lex - 31978D0658 - EN

ARTICLE 1

MEMBER STATES SHALL PURSUE ECONOMIC POLICIES WHICH CONFORM TO THE GUIDELINES , SET OUT IN THE ANNEX , ON THE ADAPTATION OF PUBLIC BUDGETS FOR 1978 AND THE PREPARATION OF PUBLIC BUDGETS FOR 1979 .

ARTICLE 2

THIS DECISION IS ADDRESSED TO THE MEMBER STATES .

DONE AT BRUSSELS , 24 JULY 1978 .

FOR THE COUNCIL

THE PRESIDENT

K . VON DOHNANYI

ANNEX

THE CONTRIBUTIONS OF INDIVIDUAL MEMBER STATES THROUGH BUDGETARY POLICY TO THE CONCERTED ACTION OF THE COMMUNITY WILL BE AS FOLLOWS :

( I ) IN DENMARK , THE MARGIN FOR MANOEUVRE IS EXTREMELY LIMITED . AS A CONTRIBUTION TO THE CONCERTED ACTION , HOWEVER , PERSONAL INCOME TAX CONCESSIONS AMOUNTING TO DKR 500 000 000 , OR 0.2 % OF GDP , WILL BE MADE IN THE 1979 BUDGET ( BEYOND THE AUTOMATIC ADJUSTMENTS THAT ARE LEGALLY PROVIDED FOR ), AND THIS ACTION WILL BE FURTHER LINKED TO SECURING A STABILITY-ORIENTED OUTCOME TO FORTHCOMING INCOME NEGOTIATIONS . THE PUBLIC SECTOR BORROWING REQUIREMENT MAY ALSO BE ALLOWED TO WIDEN SOMEWHAT .

( II ) IN THE FRAMEWORK OF CONCERTED ACTION THE CONTRIBUTION OF THE FEDERAL REPUBLIC OF GERMANY WILL BE TO PROPOSE BY THE END OF AUGUST TO THE LEGISLATIVE BODIES ADDITIONAL AND QUANTITATIVELY SUBSTANTIAL MEASURES UP TO 1 % OF GNP , DESIGNED TO ACHIEVE A SIGNIFICANT STRENGTHENING OF DEMAND AND A HIGHER RATE OF GROWTH . THE ORDER OF MAGNITUDE WILL TAKE ACCOUNT OF THE ABSORPTIVE CAPACITY OF THE CAPITAL MARKET AND THE NEED TO AVOID INFLATIONARY PRESSURES . THE CHOICE OF SPECIFIC MEASURES WILL HAVE TO DEPEND ON THE TIME-LAGS WITH WHICH THE IMPACT ON EFFECTIVE DEMAND COULD BE ACHIEVED .

( III ) IN FRANCE IMPROVED ECONOMIC PROSPECTS HAVE BEEN ESTABLISHED IN RECENT MONTHS , IN PART THROUGH MEASURES TO ASSURE A MORE HEALTHY FUNCTIONING OF THE PRICE MECHANISM . AN IMPORTANT ASPECT OF THESE MEASURES IS TO MAKE AVAILABLE TO ENTERPRISES THE RESOURCES NECESSARY TO STRENGTHEN INVESTMENT . IN THE FRAMEWORK OF CONCERTED ACTION THE 1978 BUDGET DEFICIT WILL BE INCREASED BY 0.5 % OF GDP . THE FRAMING OF THE 1979 BUDGET WILL FURTHER CONTRIBUTE TO THE COMMON STRATEGY , WITH INCREASES IN TRANSFER PAYMENTS TO CERTAIN CATEGORIES OF HOUSEHOLDS AND DEFERMENT OF DISCRETIONARY ACTION TO REDUCE THE BUDGET DEFICIT BENEATH THE LEVEL FORESEEN FOR 1978 .

( IV ) IN IRELAND AN EXPANSIONARY POLICY IN 1978 IS SUSTAINING THE HIGHEST RATE OF GROWTH IN THE COMMUNITY . CONCERTED ACTION WILL HELP IRELAND TOWARDS THE OBJECTIVES SET OUT IN THE RECENT GOVERNMENT GREEN PAPER ' DEVELOPMENT FOR FULL EMPLOYMENT ' , AND , NOTABLY , ACHIEVE IN 1979 A CONTINUED STRONG GROWTH OF OUTPUT WITH A REDUCTION IN THE CENTRAL GOVERNMENT BORROWING REQUIREMENT TO 10.5 % OF GDP ( COMPARED WITH 13 % IN 1978 ). IRELAND ' S OWN CONTRIBUTION WILL THEREFORE BE MODEST . HOWEVER , SOME FURTHER GROWTH-ORIENTED MEASURES WILL BE TAKEN IN 1979 , INVOLVING A SHIFT OF BUDGETARY RESOURCES FROM CERTAIN CATEGORIES OF CURRENT SUBSIDIES INTO EXPENDITURES WITH GREATER EMPLOYMENT-CREATING EFFECTS . THE COMMUNITY WILL FOR ITS PART HELP STRENGTHEN INVESTMENT THROUGH A PRIORITY IN THE ALLOCATION OF ITS FINANCIAL RESOURCES .

( V ) IN ITALY THE PRIORITY OBJECTIVE OF CONCERTED ACTION IS TO ATTAIN A DURABLE REAL GROWTH , WITH IN 1979 AN INCREASE IN THE RATE OF GROWTH OF 1.5 % HIGHER THAN IN 1978 , THROUGH A REDUCTION IN THE PUBLIC SECTOR DEFICIT AND THE ESTABLISHMENT OF A SOUNDER FINANCIAL BASIS FOR FUTURE DEVELOPMENT . IN 1978 THERE HAS ALREADY BEEN A SUBSTANTIAL INCREASE IN THE PUBLIC SECTOR DEFICIT ( ENLARGED DEFINITION ) FROM 12.1 % OF GDP IN 1977 . THE ITALIAN GOVERNMENT IS INTRODUCING MEASURES TO REDUCE THIS DEFICIT SIGNIFICANTLY IN THE REMAINDER OF 1978 , AND IN 1979 . TO THIS END , BUDGETARY MEASURES ARE NOW BEING PREPARED TO RAISE CERTAIN TAXES AND PUBLIC TARIFFS , REDUCE PUBLIC EXPENDITURE , AND SO LIMIT THE PUBLIC SECTOR DEFICIT IN 1978 TO LIT 31.5 BILLION ( 15.7 % OF GDP ). FOR 1979 FURTHER SIGNIFICANT PROGRESS MUST , WITH THE SUPPORT OF THE SOCIAL PARTNERS , BE MADE IN REDUCING THIS DEFICIT AS A PERCENTAGE OF GDP , PRINCIPALLY THROUGH MEASURES TO STEM THE NOMINAL GROWTH OF SOCIAL TRANSFER PAYMENTS AND PUBLIC CONSUMPTION , AND TO REDUCE SUBSIDIES TO NATIONALIZED ENTERPRISES . IN THE CONTEXT OF STRONGER GROWTH PROSPECTS IN EUROPE RESULTING FROM CONCERTED ACTION , THE OBJECTIVE IS TO REDUCE THE ENLARGED PUBLIC SECTOR DEFICIT BY SOMEWHAT IN EXCESS OF 1 % OF GDP BY COMPARISON WITH THE REVISED OBJECTIVE FOR 1978 , WITH FURTHER REDUCTIONS TO BE PLANNED FOR THE FOLLOWING TWO YEARS IN THE CONTEXT OF THE NEW TRIANNUAL BUDGET PROGRAMMING ENVISAGED BY THE GOVERNMENT . THE COMMUNITY WILL FOR ITS PART HELP STRENGTHEN INVESTMENT THROUGH A PRIORITY IN THE ALLOCATION OF ITS FINANCIAL RESOURCES .