Faced with uncertainty that has “increased significantly” due to Russia’s “unprovoked and unjustified” invasion of Ukraine, the euro area finance ministers are advocating “agile and flexible” national fiscal policies and say they are ready to adapt the euro area’s fiscal stance “to the changing circumstances as needed”.
The 19 euro area countries underline that they will “urgently address and consider concrete options” to “deal with the impact of rising energy prices on our citizens and businesses” on the basis of the options put forward by the European Commission at the beginning of March (see EUROPE 12906/4) and in line with the mandates received at the Versailles European Summit (see EUROPE 12909/1).
At this stage, the euro area countries support the European Commission’s view that, at this point, the economic fundamentals of the euro area are solid, marked by a robust, albeit somewhat weaker recovery due to the Omicron wave of the Covid-19 pandemic, and very low unemployment. All Member States will return to their pre-pandemic levels of wealth generation by the end of 2022.
In its winter economic forecasts, which do not take into account the war in Ukraine, the Commission expects GDP to grow by 4% in the EU this year, after a rebound to 5.3% in 2021 (see EUROPE 12888/5).
On this basis, the finance ministers endorse the Commission’s suggestion to move from a supportive fiscal stance in the euro area in 2021 and 2022 to a “broadly neutral” fiscal stance in 2023, “while standing ready to react to the evolving economic situation, also in view of the high level of uncertainty”.
In this respect, the meeting in May-June to confirm or refuse the deactivation, at the beginning of 2023, of the derogation clause of the Stability and Growth Pact will be decisive.
See the Eurogroup statement: https://aeur.eu/f/rm (Original version in French by Mathieu Bion)