On Monday 15 March, the Finance Ministers of the euro area will debate the structural changes in the economy caused by the Covid-19 pandemic, as well as the evolution of the fiscal response to the economic crisis.
No operational conclusion is expected from this discussion, but it will be an opportunity for the 19 ministers to consider the medium and long-term structural changes brought about by the pandemic, a European source said on Wednesday 10 March. The pandemic has affected some economic sectors, such as “tourism and hotels”, more than others, while digital technologies have benefited from the acceleration of the “digital transition”, the source noted, at the same time that Europe is also trying to provoke the “reshoring” of certain links in the global value chain.
Although the European Commission has recently advocated maintaining the freeze on the Stability and Growth Pact until the end of 2022 (see EUROPE 12670/1), the Eurogroup will not take a position on this issue.
“It is far too early to set a precise timetable”, the source said, pointing out that the issue of European fiscal rules will have to be decided at the Ecofin Council. This should take place at the end of the first half of 2021.
On Monday, the ministers are expected to stress the importance of maintaining a coordinated budgetary response to Covid-19, an approach that has had a positive effect on the economy. They could “conceptualise” how to shift from temporary emergency fiscal measures (State aid, state guarantees) - which are still needed at present because of the uncertainties related to the pandemic - to more sector-focused and geographically targeted growth-enhancing measures.
One option often discussed is the possibility of equity investment in weak but solvent companies, this source said.
International role of the euro. Third topic: the international role of the euro. The Eurogroup will discuss how to use the single currency to strengthen the EU’s strategic autonomy on the international stage, on the basis of the Commission’s communication (see EUROPE 12639/5).
For this source, this requires a deepening of the economic and monetary union, including the completion of the banking union.
These discussions will enable the President of the Eurogroup, Paschal Donohoe, to write a letter on the issue to the leaders of the euro area, who will address the issue on Friday 26 March.
Greece. Finally, the ministers will discuss the 9th post-rescue plan monitoring report for Greece.
This source mentioned reforms - bankruptcy law, prevention of payment arrears, capacity to absorb financial aid from the European Recovery Plan, and the labour code - on which progress is needed.
The next report on Greece will serve as a basis for a possible decision by the Eurogroup to further alleviate Greek debt servicing.
More information on the Eurogroup meeting: http://bit.ly/38piiVC (Original version in French by Mathieu Bion)