On Thursday 9 July, finance ministers from the countries of the euro area will determine the appropriate budgetary stance for 2027 and continue discussions on energy measures that will be eligible for flexibility under the Stability and Growth Pact.
In a statement it is due to adopt, the Eurogroup is expected to indicate that, on the basis of unchanged policy, the budgetary stance for 2027 would be “broadly neutral” at euro-area level, a European source said on Tuesday 7 July. According to the source, by recommending that countries take “additional measures” so that they comply with the agreed multiannual trajectory for non-defence expenditure, the budgetary stance would then become “restrictive”.
As for 2026, the budgetary stance at euro-area level is expected to be “slightly expansionary”, the diplomat explained, mainly as a result of increased military and infrastructure spending. By contrast, the impact of emergency measures in response to the surge in energy prices caused by the war in the Middle East would remain “limited”.
On Thursday, after an initial discussion in Luxembourg (see EUROPE 13886/4), the Eurogroup will again discuss decarbonisation measures that may be eligible under the derogation clause of the Stability and Growth Pact, as suggested by the European Commission (see EUROPE 13880/5).
Questions that remain open include the level of detail to be reflected in the note that the European Commission has sent to experts from the EU Council and whether criteria should be set for identifying eligible measures.
Despite criticism received from organisations such as the European Fiscal Board (see EUROPE 13885/30), it should be acknowledged that the European Commission has found a reasonable balance between the sustainability of public finances and the incentive for decarbonisation, the European source said.
Once the Commission has finalised its guidance, Member States that have made use of the Pact’s national derogation clause will be able to highlight their measures, which will be validated in fine by the EU Council.
It should be noted that, the same evening, the ministers will hold an informal dinner during which they will address energy security issues in the presence of their British counterpart, Rachel Reeves, and Norwegian counterpart, Jens Stoltenberg, as well as Fatih Birol, Executive Director of the IEA.
International role of euro. The ministers will also review the international role of the euro which, as a reserve currency, maintains a market share of 20%, second only to the US dollar. Also under consideration is the notion of how to strengthen that appeal. Furthermore, the European Commission will present a note concluding there is no direct link between the exchange rate of the single currency and its international role.
Digital finance. Meeting thereafter in inclusive format, the Eurogroup is expected to adopt a statement on its specific monitoring of technological developments in the financial field. Launched under the presidency of Kyriákos Pierrakákis, a work programme devoted to digital finance aims to ensure that the regulatory framework remains suited to changes in the sector, while preserving a fair balance between innovation and financial stability (see EUROPE 13821/23).
According to a European diplomat, the programme has been marked by an “extremely good amount of engagement” and the Eurogroup has now reportedly reached a “very strong common position on how to ensure the EU’s financial system is fit for the digital age”. According to the diplomat, the ministers will underline “the central role of the digital euro” in creating an ecosystem for digital finance, and they will also guide “the greater use of tokenisation”.
“Regulatory clarity will no doubt be one important aspect to enable digital assets, new technologies to scale without compromising financial stability”, the diplomat added.
On Thursday, the implications of artificial intelligence (AI) for financial infrastructures will also be discussed, in the light of the rise of AI models such as Mythos from the company Anthropic (see EUROPE 13862/4). Arthur Mensch, co-founder of the French company Mistral AI, will take part in that discussion.
Lastly, the Eurogroup will adopt its work programme for the coming months. (Original version in French by Mathieu Bion and Bernard Denuit)