On Friday 25 February in Paris, the Finance Ministers of the euro area countries will assess the risks that the Russian-Ukrainian crisis could pose to the euro area economy, particularly in terms of inflation.
In its usual review of the macroeconomic situation, the Eurogroup is expected to reiterate that fundamentals remain strong, despite a slowdown in growth due to the impact of the Omicron variant of the virus responsible for the pandemic.
In its winter economic forecasts, the European Commission revised its economic growth forecast for the euro area and the EU slightly downwards from 4.3% to 4.0% of GDP (see EUROPE 12888/5).
“Cautious optimism” prevails despite “significant headwinds”, noted an EU source on Tuesday 22 February, citing soaring inflation (confirmed at 5.1% in January) and demand outstripping supply, two trends that “are lasting longer than expected”. According to this source, the moderately expansionary fiscal stance advocated by euro area countries for 2022 (1% of GDP versus 1.75% in 2021) remains appropriate (see EUROPE 12871/25).
Asked about the impact of geopolitical tensions in eastern Ukraine as Germany halted the certification of the Nord Stream 2 gas pipeline (see EUROPE 12896/2), our source said it could have an impact on energy prices and ultimately on inflation, which has already reached record levels.
However, the Eurogroup will not discuss the appropriate fiscal stance for 2023 on Friday. This discussion is postponed until Monday 14 March, after the European Commission has presented its proposals next week.
Economic governance framework. The ministers will also discuss, in the context of the revision of the EU’s economic governance framework, the procedures for excessive macroeconomic imbalances that can lead to sanctions for euro area countries.
Last November, the Commission concluded that in-depth reviews in this area were warranted for twelve Member States: Croatia, Cyprus, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Romania, Spain and Sweden (see EUROPE 12839/1). Within this group, Cyprus, Greece and Italy have excessive imbalances.
The ministers will discuss the predictability of the excessive macroeconomic imbalance procedure, the appropriateness of incorporating new risks, such as climate change, into the analyses carried out.
Greece. The Eurogroup is also expected to support Greece’s request to repay early its loans from the IMF and a special fund created in 2010.
On Tuesday, the Board of Directors of the EFSF Facility, the rescue fund that preceded the European Stability Mechanism (ESM), announced a sixth Greek public debt relief package of €767 million (see EUROPE 12896/29), following a positive assessment by the Eurogroup on Athens’ fiscal and reform efforts.
Digital Euro. Ministers will continue their discussions on the desirability of introducing a digital euro (see EUROPE 12762/17).
The Commission will soon launch a public consultation on the issue, with a view to a targeted legislative proposal scheduled for 2023.
Finally, the Eurogroup will approve the reappointment of Tuomas Saarenheimo of Finland as chair of the Eurogroup working group for a further two years. (Original version in French by Mathieu Bion)