Eurozone finance ministers on Monday (6 December) endorsed the European Commission’s recommendations for a moderately expansionary fiscal stance for the eurozone in 2022.
This positioning will allow the euro area to maintain “agile” budgetary support targeted at the sectors of activity still affected by the Covid-19 pandemic and to preserve public investment, said the president of the Eurogroup, Paschal Donohoe, at the end of the meeting, which was followed by a dinner devoted to the banking union.
According to the Commission, the aggregate expansionary stance at the eurozone level will be 1.0% of GDP next year, down from 1.75% in 2021 (see EUROPE 12839/1).
The European Commissioner for the Economy, Paolo Gentiloni, stressed that this was not a question of budgetary ‘tightening’, but of better targeting of public aid. He welcomed the fact that public investment will be “above pre-pandemic levels”, thanks in particular to the contribution of the NextGenerationEU Recovery Plan grants. Such a dynamic is very different from the one pursued after the 2008 financial crisis, he noted.
On the 19 countries’ draft budgetary plans for 2022, which are subject to qualitative opinions only, the Eurogroup agrees with the Commission that the most indebted countries should limit the growth of their public spending, especially if it is structural in nature and not directly related to the pandemic.
The Ministers therefore call on those highly indebted Member States which, according to the Commission, do not plan to sufficiently limit the growth of national current expenditure, to “take the necessary measures”.
This includes Italy, whose planned spending next year - considered excessive in relation to the required level - would be around 1.5% of Italian GDP, as well as Latvia and Lithuania, but to a lesser extent.
Ministerial discussions on the budgetary stance for 2023, when the Stability and Growth Pact is due to resume, will start in spring 2022 on the basis of specific proposals from the Commission.
See the Eurogroup statement: https://bit.ly/31xlspV (Original version n French by Mathieu Bion)