On Thursday, 7 December, euro area finance ministers adopted the European Commission’s assessment of the draft budgetary plans for 2024 (see EUROPE 13297/16).
Noting that the budget proposals submitted by Belgium, Finland, France, and Croatia risk not being in line with the recommendations they received from the EU Council with regard to controlling the growth of net budget expenditure, the Eurogroup asks that these four countries consider taking steps to address the identified risks “in a timely manner and as necessary”.
In keeping with a previous position that was settled upon in July (see EUROPE 13222/13), the Twenty consider the restrictive fiscal stance—0.6% of GDP—at the euro-area level for 2024 that is recommended by the European Commission to be “appropriate”.
This subsequent tightening of fiscal policy in the euro area, after that of 2023, will be due to the gradual removal of the emergency measures that Member States put in place so as to enable households and businesses to cope with the energy crisis. Countries that have not lifted all emergency measures are asked to do so as soon as possible.
Furthermore, the Eurogroup notes that the extent of this fiscal contraction could be influenced by any measures Germany may possibly take after the Constitutional Court in Karlsruhe rejected the 2024 draft budgetary plan.
The pursuit of prudent fiscal policies will make it possible for the overall level of government deficits to be reduced, even though eight euro-area countries are expected to report deficits above 3% in 2023. In 2024, there will be nine euro-area countries in this position. The European Commission indicated that it would open infringement procedures for excessive deficits this coming June.
After the slowdown observed in 2023, the Eurogroup is expecting—despite geopolitical uncertainties—a gradual resumption of growth, notably supported by a strong labour market, next year.
See the Eurogroup statement: https://aeur.eu/f/a17 (Original version in French by Mathieu Bion)