On Monday 17 February, the finance ministers of the euro area countries will discuss the assessment of the economic governance framework in the European Union and the fiscal capacity for the euro area, which will be launched at the beginning of 2021. No decision is expected, apart from the confirmation of the Finnish diplomat Tuomas Saarenheimo as head of the Eurogroup working group (see EUROPE 12420/20).
After an introductory debate on the issue in Helsinki last September (see EUROPE 12328/8), ministers will again discuss how to improve the European framework for economic governance and, in particular, the advisability of reforming the European Stability Pact to simplify it and/or stimulate environmentally sustainable investments, in the light of the debate which the Commission has just officially launched (see EUROPE 12419/4).
This will be a "first discussion session", a European diplomatic source said on Friday 7 February. Pointing to the existence of rather divergent starting positions among member states, she observed in the EU Council "a high degree of caution" before embarking on major reforms, if their objective is not clearly established beforehand.
According to this source, there is a consensus among Member States that European budgetary rules are complex and based on non-measurable indicators (e.g. ‘output gap’) when it comes to assessing the structural efforts of the Member States. But there is no consensus on how to respond, because we cannot return to an approach based solely on budgetary objectives in nominal terms, at the risk, according to this diplomat, of increasing the pro-cyclicality of the rules.
Member States are also divided on the introduction of a specific measure for so-called 'green' investment. Several options could be considered, such as the creation of a 'golden rule' which would exempt certain expenditure from being recorded in the government deficit or via a reinterpretation of the existing flexibility of the Stability and Growth Pact.
On Monday, in the light of the winter economic forecasts to be presented by the Commission on Thursday 13 February, ministers are also expected to discuss the euro area budgetary stance best suited to the current economic circumstances, marked by weakening growth and very low interest rates.
In its proposal for a recommendation on euro area policy for 2020, the European Commission proposed in mid-December that the Nineteen apply "a supportive fiscal stance at the aggregate level in the event of a worsening outlook, while pursuing policies fully respecting the Stability and Growth Pact, taking into account country-specific circumstances and avoiding pro-cyclicality as far as possible", (see EUROPE 12392/13).
Budgetary capacity. At Twenty-Seven, the finance ministers will once again take stock of the creation of a budgetary instrument for convergence and competitiveness (BICC) in conjunction with the multiannual financial framework (MFF) 2021-2027.
Since the partial agreement reached in October in Luxembourg (see EUROPE 12346/2), work has continued on the possibility of the Nineteen contributing to this budgetary capacity beyond the amounts that will be provided for in the post-2020 MFF.
"At this stage, the discussion is more about the need for additional resources", admitted this diplomatic source.
Unlike the Netherlands, France fervently hopes to see an intergovernmental agreement (IGA) drawn up at nineteen so that the euro zone countries will be able to contribute more to the BICC.
The Eurogroup must again report to the European Council on the modalities of such an intergovernmental agreement.
It should be noted that the finalisation of the reform of the European Stability Mechanism (ESM), the permanent rescue fund for the euro area, is not on the ministerial agenda. A final agreement is planned for March in order to start national ratification processes the following month (see EUROPE 12405/22).
Finally, ministers will have a thematic discussion on labour taxation and its impact on employment and growth. They will take note of Ireland's post-bailout financial report, which welcomes the country's strong economic performance while recommending that developments in the Irish financial sector be monitored to avoid overheating. (Original version in French by Mathieu Bion)