The finance ministers of the euro area countries, meeting informally in Nicosia on Friday 22 May, will discuss the effects of instability in the Middle East on the euro area. They will also look at housing affordability and take stock of progress in the legislative work on the digital euro in the European Parliament.
The ministers will take stock of the macroeconomic situation, in the light of the economic forecast presented by the Commission on Thursday (see EUROPE 13872/8). It forecasts a slowdown in average growth in the euro area, to 0.9% of GDP in 2026 compared with 1.4% in 2025, and, apart from Ireland (-1.2% of GDP in 2026 against 12.3% in 2025), all euro area countries should record positive growth this year.
Despite significant uncertainty linked to the impact of the war in the Middle East, a European source saw, on Wednesday 20 May, a glimmer of hope in the fact that international supply chains, notably for hydrocarbons, are being reorganised to circumvent the blockage of the Strait of Hormuz, a situation which, for this source, would make it possible to avoid fuel shortages, “at least for the moment”.
The Eurogroup is expected to reiterate a majority position among ministers, according to which any emergency fiscal measures taken to support households and businesses affected by the inflationary shock linked to soaring energy prices should be temporary, targeted, in line with EU fiscal rules and compatible with the objectives of the climate transition (see EUROPE 13861/1).
By contrast, according to this source, the Italian request to extend to expenditure for the energy transition the application of a flexibility clause in the Stability and Growth Pact, which 17 Member States have activated to increase their military spending, should not be discussed in Nicosia (see EUROPE 13869/15). A majority of ministers are not in favour, said this source.
Housing. The ministers will continue their exchanges on housing affordability. “Housing is a political top-tier issue in almost all Member States. Housing policy is, admittedly, a national competence, but it is nevertheless an issue of common concern at EU level”, a European diplomat said on Wednesday.
The European Commission presented a European plan for affordable housing last December. At the same time, the European Semester encourages Member States to act in response to the housing crisis, which it sees as a competitiveness issue, while meetings of the Employment, Social Policy, Health and Consumer Affairs Council (EPSCO) address the subject mainly from a social angle.
“Finance ministers obviously want to make sure that the money that we spend is well used and in a manner that supports a good functioning of the economy”, the diplomat said, specifying that the discussion would serve to share experiences.
Digital euro. Lastly, the Eurogroup will take stock, together with the Chair of the European Parliament’s Committee on Economic and Monetary Affairs (ECON), Aurore Lalucq (S&D, French), of the ongoing legislative work on the digital euro (see EUROPE 13854/15). A position from the European Parliament is expected by the end of the first half of the year with a view to launching interinstitutional negotiations (trilogues) with the Council of the EU under the next Irish Presidency. (Original version in French by Mathieu Bion and Bernard Denuit)