On Monday 7 November, the Finance Ministers of the euro area will take stock of the macroeconomic situation, which is deteriorating further, and will discuss the budgetary orientation for 2023 at the monetary zone level, which will be enlarged to twenty countries as of January with the arrival of Croatia.
The data points to “increased likelihood of recession around turn of the year”, a European source noted on Thursday 3 November. However, despite record inflation estimated at 10.7% in October and growth of 0.2% in the second half of the year in the euro area, the source did not wish to describe this macroeconomic situation as “stagflation”, seeing it more as a cyclical phenomenon, linked to Russian aggression in Ukraine, than as a structural one. Nevertheless, the source says that for a certain period we will have “zero or even negative” growth figures.
On Monday, the European Commission is expected to give Ministers some indication of the economic forecasts to be presented on Friday 11 November, while the ECB will detail the recent measures announced, including a further 0.75% increase in key rates (see EUROPE 13052/1).
The Eurogroup will also discuss the draft budgetary plans for 2023 with a view to establishing a trend for the fiscal stance at the euro area level.
In particular, the source noted that national emergency measures to relieve citizens and businesses from soaring energy prices are, for the most part, not as targeted or temporary as they should be. “It’s not surprising, because it’s the easiest thing to do”, but there is also “the recognition that this is not sustainable in the long term”, noted the source.
Ministers will consider which measures are economically and politically sustainable. ECB President Christine Lagarde recently floated the idea of activating measures to subsidise energy prices for vulnerable categories up to a certain level of consumption, beyond which prices would then reflect market prices. No concrete conclusions are expected on Monday, although if the positions of the euro area countries come together, the Commission could be asked to formulate general principles.
Still on the subject of budgetary policy, the 19 countries of the euro area will have a final opportunity to reiterate their positions on the reform of the European economic governance framework to the Commission, which will present its ideas on Wednesday 9 November.
Italy. It should be noted that, for his first participation in the Eurogroup, the Italian Minister, Giancarlo Giorgetti, will present his country’s economic and budgetary priorities for the coming years.
According to this European source, the echoes received so far from the Italian government, whose Prime Minister, Giorgia Meloni, was in Brussels on Thursday, are “by and large positive”, because they express the will of the new authorities’ “clear willingness to engage, to play within he rules of the game”.
Presidency of the Eurogroup. Eurogroup President Paschal Donohoe, whose two-and-a-half-year term expires in mid-January, will inform his counterparts of the start of the procedure to elect a new president. The December ministerial meeting is “the target date” for a decision, the source said.
There is still uncertainty about whether Mr Donohoe will run again, due to a possible reshuffle of the Irish government at the end of 2022. The Irish Finance Minister was narrowly elected over Spain’s Nadia Calviño in July 2020 (see EUROPE 12524/1).
Finally, in the presence of the Croatian and Bulgarian Ministers, the Eurogroup will discuss operational aspects of the banking union on the basis of presentations by the chairmen of the Single Supervision Mechanism (SSM) and the Single Resolution Mechanism (SRM). (Original version in French by Mathieu Bion)