On Friday 13 September in Budapest, the President of the Eurogroup, Paschal Donohoe, stressed the importance of Member States preparing “credible” multiannual budget plans so that the revised Stability Pact, which will come into force at the start of 2015, can get off to a good start.
“It is really important that this [European economic governance] framework gets off to a good and credible start and that we meet the commitments we have to each other”, in particular to “guarantee the viability of public debt”, declared Mr Donohoe at the end of the meeting of the finance ministers of the euro area countries. He said he was “confident that all Member states are doing their best not just on the timelines but more importantly the policy direction with regard to fiscal policy”.
The European Commission has asked the Member States to submit draft multiannual plans by Friday 20 September, setting out the budgetary path they wish to follow to consolidate their public finances, as well as the reforms and investments they will undertake over a period of between 4 and 7 years.
But France and Belgium, where governments have yet to be put in place following general elections, have asked for more time, as the legislative framework allows (see EUROPE 13478/18).
According to one source, the EU institution expects a majority of Member States to present their multiannual plans at the same time as their draft budget plans for 2025, as these are designed to put the first year of the multiannual plan into practice.
According to Mr Donohoe, the political situation in certain countries is the result of “democratic processes”, which European fiscal rules must take into account. The President of the Eurogroup also noted that the current budget planning exercise was taking place against a macroeconomic backdrop marked by sluggish growth that was uneven across the Member States. On the positive side, he cited the gradual containment of inflation, praising the ECB’s efforts in this area (see EUROPE 13481/2) and the robustness of the labour markets.
In the same vein, the Executive Director of the European Stability Mechanism, Pierre Gramegna, stressed the importance of Member States implementing the revised Stability Pact in a credible manner. He referred to two episodes of “volatility” on the financial markets this summer, which had demonstrated the sensitivity of the sovereign debt securities of EU countries to international events.
Calling for “vigilance in this period of timid economic recovery”, Mr Gramegna felt that these episodes were a good signal to remind Member States of the need to apply a “prudent” budgetary policy, as a first test for the new European framework for economic governance.
On Friday, only seven euro area countries - Belgium, Cyprus, Croatia, Italy, Luxembourg, Malta and Slovenia - were represented at ministerial level, confirming the lack of enthusiasm among Member States to give visibility to the informal events of the Hungarian Presidency of the EU Council. Asked why he had decided to maintain the Eurogroup meeting in Budapest despite the low level of political participation, Mr Donohoe said that it was important for the euro area countries to meet every month to coordinate their action on issues of everyday concern to Member States, such as “purchasing power”. (Original version in French by Mathieu Bion)