(Bloomberg) — The euro zone’s finance ministers agreed on the need for prudent fiscal policies that ensure debt is sustainable over the medium-term and boost growth in a sustainable way through investment and reforms.
(Bloomberg) — The euro zone’s finance ministers agreed on the need for prudent fiscal policies that ensure debt is sustainable over the medium-term and boost growth in a sustainable way through investment and reforms.
The European Commission last week issued budgetary guidance for next year in which it called on member states to rein in generous spending permitted to help households and businesses through the Covid pandemic and energy crisis as it sets out a return to greater discipline.
“In light of economic prospects and in a context of high inflation and tighter financing conditions, we reiterate that broad-based fiscal stimulus to aggregate demand is not warranted,” the Eurogroup, which brings together the currency bloc’s finance ministers, said in a statement on Monday.
Member states will closely monitor the impact of additional energy support measures or the extension of existing ones.
“We should avoid permanent deficit-increasing measures,” Eurogroup said.
Finance ministers agreed to continue to phase out help with energy costs, which would also contribute to bringing down government deficits.
The European Union’s fiscal rules, which set limits on debt and deficits as a portion of gross domestic product, were suspended during the Covid pandemic and are due to come back into force at the start of next year. The commission has given interim advice while a debate continues on revising the framework — a process expected to take until early 2024.
Asked about Germany’s position in Brussels on Monday, Finance Minister Christian Lindner said: “We wouldn’t agree with a Eurogroup statement in which the fiscal guidance is discussed in connection with the ongoing reform process of the European Stability and Growth Pact.”
French counterpart Bruno Le Maire said discussions would continue among finance chiefs and that the existing fiscal rules were clearly no longer suitable given the wide differences in countries’ public debt levels in the wake of the Covid pandemic.
“We need new rules,” he said. “The sooner we can define these new rules, the safer the euro zone will be. It’s in our common interest to reach an agreement so the commission gets a mandate to propose a legislative reform of the Stability and Growth Pact.”
–With assistance from Katharina Rosskopf and Alessandra Migliaccio.
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