On Thursday 13 July in Brussels, the finance ministers of the euro area countries will adopt a declaration in which they are expected to recommend a restrictive fiscal stance for the euro area in 2024.
There is “fairly broad agreement” around the table that “the fiscal stance for next year should be restrictive”, a European source confirmed on Tuesday 11 July. In their view, the Eurogroup will not set quantitative targets, but will provide qualitative recommendations to the 20 countries concerned, in particular to preserve the agility of budgetary policies in a period that remains marked by uncertainty.
This position is in line with that of the European Fiscal Board, which also advocates fiscal consolidation, albeit slightly more substantial than that put forward by the Commission (see EUROPE 13211/13). The resilience of the euro area economy, the high level of employment and the persistence of inflation all point to the conclusion that a consolidation of public finances now seems appropriate.
The removal of emergency budgetary measures from 2022 alone, put in place to help households and businesses cope with the budgetary crisis and estimated at 1.25% of the euro area’s total GDP, represents twice the level of fiscal consolidation recommended by the Commission.
International role of euro. The ministers will hold an exchange of views on the international role of the euro in 2022, based on the ECB’s June report (see EUROPE 13206/5). This report shows that, despite a tense and volatile geopolitical context, the euro will remain the second most important international currency after the US dollar in 2022.
Among other things, the study indicates that the behaviour of third countries not geopolitically aligned with the United States and the European Union following the restrictive economic measures adopted against Russia does not appear to have significantly affected the international monetary system and, in particular, the level of foreign currency reserves.
However, according to this European source, the international status of a currency is not a given and remains linked to the strength of its economy. In the case of the euro, maintaining this international role remains linked to sound economic policies and institutional progress towards European economic and financial integration.
The European Commission will in turn present an analysis of the subject.
Digital euro. On Thursday, the digital euro will once again be on the agenda of the Eurogroup meeting taking place in an inclusive format. There will be a presentation on the ‘single currency’ package presented at the end of June (see EUROPE 13211/11, EUROPE 13211/12) and, more specifically, its proposal for a legal framework for a digital euro, should this be launched by the ECB Governing Council.
The Ecofin Council will continue to be responsible for legislative work relating to the creation of a digital euro.
CMU. Finally, the Eurogroup will again discuss the project to stimulate national capital markets and facilitate their integration at European level. (Original version in French by Mathieu Bion and Émilie Vanderhulst)