On Monday 13 March, the finance ministers of the euro area countries will discuss the budgetary guidelines that the European Commission recently presented (see EUROPE 13137/6).
The Commission confirms the return to the full application of fiscal rules from next year, including recommendations for socio-economic policies based on both qualitative and quantitative targets.
The EU institution advocates reducing or even abolishing emergency measures to support households and businesses most affected by soaring energy prices over the winter. In its view, “the time for broad-based fiscal stimulus is behind us” and public finances need to be put back on a sustainable path in the medium term, a European source said on Friday 10 March.
In 2024, infringement procedures for excessive government deficits could be initiated for countries whose budgetary trajectory is still far from the 3% deficit threshold. The Commission also incorporates some elements of the EU economic governance framework, as it could be reformed, notably by including a single indicator of public expenditure and differentiating the efforts required according to national situations.
This source expects a “lively” discussion on Monday on the coordination of fiscal policies for next year, which is expected to be the subject of a Eurogroup declaration. On Thursday, German minister Christian Lindner nevertheless criticised the Commission for having preemptively included in its 2024 budgetary guidelines certain elements of the Pact reform that are still under discussion. Germany does not want this to set a precedent.
In addition, the 20 ministers will discuss the euro-area-specific aspects of the EU economic governance framework, on the eve of an Ecofin Council that will be asked to adopt conclusions on the upcoming reform (see EUROPE 13137/7).
In these conclusions, a paragraph will be specifically devoted to ‘euro area’ aspects, including the annual presentation of national draft budget plans, the imposition of financial sanctions that will be lower but more automatic, and taking into account the ‘euro area’ dimension in the definition of the budgetary guidelines.
The source said that “constructive” discussions at technical level had resulted in a text that will not be changed on Monday or Tuesday.
See the draft conclusions: https://aeur.eu/f/5ni
The Eurogroup will also have a further discussion on the strategic aspects of the digital euro, a project led by the ECB, but which requires strategic political guidance from the 20 euro area countries (see EUROPE 13100/4). On this occasion, the Commission should present the outline of the legislative proposal expected in May. One of the issues that could be discussed on Monday is the ‘legal tender status’ of the future digital euro, which needs to be legally defined in more detail than the current provisions of the EU Treaty.
See the Eurogroup’s January statement on the digital euro: https://aeur.eu/f/4wp
Finally, the ministers will discuss the spring meetings of the IMF and the World Bank (10-16 April in Washington), which will focus on exchange rate developments. (Original version in French by Mathieu Bion)