The finance ministers of the euro area countries will take stock, on Monday 15 January, of the macroeconomic situation, particularly in the light of the IMF’s ‘Article IV’ report for the euro area.
They are expected to confirm that growth in the euro area remains weak at the start of 2024, with the Commission having revised its forecasts downwards for 2023, to 0.6%, before forecasting a slight rebound this year (see EUROPE 13293/2).
The economy contracted in the third quarter of 2023, but there will be no marked recession in 2024, according to a European source on Thursday 11 January. The source noted the continued moderation in inflation, which stood at 2.9% last December, according to Eurostat.
Recommendation for the euro area. In this context, the Eurogroup is expected to validate, but not formally adopt, the draft recommendation on economic and fiscal policy for the euro area (see EUROPE 13325/12). A few “nuances” have been made to the Commission’s text that do not alter the substance, said this source.
The ministers will approve a restrictive aggregate fiscal stance at euro area level of 0.5% of GDP. They will advocate prudent fiscal policies, conducive to consolidating public finances, while increasing public investment in the digital and climate transitions.
As part of a cycle on economic competitiveness, the ministers will be discussing energy, where prices and supply have a macroeconomic impact. In 2023, emergency energy measures amounted to 1.0% of euro area GDP and half of them were not sufficiently targeted at the most affected households and businesses, according to the draft recommendation for the euro area.
CMU. On Monday, the Eurogroup will adopt its work programme for the first half of the year, which, in addition to monitoring the macroeconomic situation, includes discussions on the ECB’s digital euro project and the preparation of recommendations for deepening capital markets union during the next legislative cycle. These proposals could be presented between now and the Euro Summit at the end of March.
ESM. Lastly, Italian minister Giancarlo Giorgetti will be invited to present his assessment of the procedure in Italy for ratifying the treaty revising the European Stability Mechanism, the euro area’s permanent rescue fund, following another rejection by the Italian Parliament at the end of 2023 (see EUROPE 13321/16).
It is too early to draw any conclusions, but should we continue to hope that plan A will come to fruition? - asked this source. (Original version in French by Mathieu Bion)