The Finance Ministers of the euro area, and then of the European Union (all but the British Minister), will discuss the economic situation and the financing of the future fiscal capacity for the euro area at the Eurogroup meeting on Thursday 16 May.
The economic situation in the euro area will be the first topic discussed by the nineteen ministers meeting in the classic Eurogroup format. These exchanges will be based on the European Commission's spring economic forecast, presented in early May (see EUROPE 12249/6). According to the European institution, economic growth is expected to slow down in 2019, and it reiterates its concerns about the uncertainties surrounding the economic situation.
Thus, the participants in this meeting will be able to discuss the economic policy challenges for the euro area. The specific case of Italy will not be discussed on Thursday, but will be discussed in June, a European source said on Tuesday 14 May. The Commission will present its recommendations for socio-economic policy by country after the European elections.
Fiscal capacity for the euro area. The discussion on fiscal capacity for the euro area will be the main topic of this Eurogroup meeting, this time in an inclusive Twenty-seven format.
This debate echoes the mandate given to the Eurogroup in December 2018 by the Heads of State or Government to prepare, by June, a detailed proposal for fiscal capacity to support convergence and competitiveness in the euro area (see EUROPE 12160/1).
Two discussions have already taken place between the major European funders, concerning the ‘expenditure’ aspect in March (see EUROPE 12212/10), and the ‘governance’ aspect in April in Bucharest (see EUROPE 12230/4). Significant disagreements were expressed at these meetings, although discussions at the technical level are ongoing.
At this meeting on 16 May, it is the 'financing' aspect of this future instrument that will be discussed. Here too, disagreements are to be expected between the various delegations.
The delegations of Nordic Europe ('Hanseatic League'), led by the Netherlands, recalled at the end of April that they wanted the sums allocated to this tool to be strictly within the multiannual financial framework (MFF) 2021-2027. And no new taxes should, in their view, finance this tool (see EUROPE 12247/19).
On the other hand, the Franco-German proposal of February envisages new sources of financing, such as a possible financial transaction tax (see EUROPE 12200/8).
This issue cannot be completely dissociated from governance. Some countries, notably France and Germany, would like to see an intergovernmental agreement (IGA) drawn up to define the terms and conditions for contributions to the euro area budget. The Hanseatic League does not see the need for this.
On the French side, it is argued that the Dutch government has only one majority vote in the Senate. A situation that would complicate a possible ratification process of an intergovernmental agreement.
The amount to be allocated to the future fiscal capacity of the euro area will also be discussed. No figures are provided today, as these discussions are to take place in the context of the negotiations on the post-2020 multiannual financial framework. But the budget should first be modest and gradually increased.
No decision is to be expected at the end of this discussion, with the results of the work to be communicated in June, so that EU Heads of State or Government can exchange views on the subject.
This European source said he was "totally optimistic" that a "full agreement" could be reached in June. (Lucas Tripoteau with Marion Fontana and Mathieu Bion)