The Finance Ministers of the euro area countries will take stock of the economic situation on Wednesday 16 December and will express their views on the draft budget plans of the Nineteen for 2021.
This last meeting of the year will be an opportunity for the Eurogroup to analyse the economic situation in light of the experience gained during the two lockdown periods introduced in 2020, albeit with disparities between Member States, due to the Covid-19 pandemic. The impact of the emergency anti-crisis measures in place will be analysed, as well as the prospects for 2021, while Member States are gradually putting vaccination campaigns in place.
The latest economic forecasts available from the ECB, which has stepped up its PEPP operation to combat the pandemic, point to a recession in the euro area of 7.3% of GDP in 2020 and a rebound to 3.9% of GDP in 2021 and 4.2% in 2022 (see EUROPE 12620/8).
On the basis of the opinions presented in autumn by the European Commission (see EUROPE 12604/1), Ministers are expected to endorse the European institution’s position that public budgetary support to the economy should continue in 2021, although Member States should start consolidating their public finances once the pandemic has been overcome. Moreover, if some emergency budgetary support exceeds the duration of the crisis period, it should be offset by equivalent expenditure cuts.
However, “it is still too early” for the Eurogroup to discuss the timing and pace of lifting budget support, a senior European official said on Tuesday 15 December. Without citing specific criteria, the official considered that the return to normal functioning of the Stability and Growth Pact will coincide with a return to sufficiently robust economic growth thanks to widespread Covid-19 immunisation of the population.
Ministers will also discuss the euro area economic policy recommendation. In addition to continued budgetary support, they should stress the importance of stimulating investment and pursuing structural reforms. Strengthening of the international role of a single currency will also be discussed.
Finally, the President of the Eurogroup, Paschal Donohoe, will speak to the Ministers about the results of the Eurozone summit, which on Friday 11 December gave them a mandate to produce, by June 2021, a work plan on the completion of the banking union (see EUROPE 12621/3). (Original version in French by Mathieu Bion)