The finance ministers of the euro area countries recommend a restrictive fiscal stance for 2025 at euro area level, in a declaration adopted on Monday 15 July.
The implementation of the revised Stability and Growth Pact “is expected to lead to a contractionary fiscal stance for the euro area as a whole in 2025”, said the Eurogroup, for whom “this stance is appropriate, in light of the macroeconomic outlook, the need to continue to enhance fiscal sustainability, and to support the ongoing disinflationary process”.
The ministers also agreed that “gradual but sustained” fiscal consolidation remains necessary in the future, with the impact of deficit and debt reduction on investment to be minimised.
Before the meeting, the President of the Eurogroup, Paschal Donohoe, had indicated that the ministerial declaration sought both to reduce public debt after the period of very high inflation and the Covid-19 pandemic and to support investment.
The Eurogroup believes that the macroeconomic conditions are in place for a “gradual acceleration of economic activity in 2024 and 2025”, even if downside risks continue to predominate due to the tense geopolitical context.
A restrictive budgetary stance for 2025 will follow on from that recommended for 2024, which is also restrictive, with the lifting of the emergency budgetary measures that cushioned the surge in energy prices (see EUROPE 13328/25). It should reduce the public deficit for the euro area to 2.8% of GDP and public debt to around 90% of GDP.
See the Eurogroup press release: https://aeur.eu/f/d1f (Original version in French by Mathieu Bion)