Autumn Fiscal Package: Commission adopts Opinions on euro area Draft Budgetary Plans

Dombrovskis

European Union, 2019 Source: EC – Audiovisual Service

This article is brought to you in association with the European Commission.


The European Commission has today presented its Opinions on euro area Member States’ 2020 Draft Budgetary Plans, taken steps under the Stability and Growth Pact and adopted the fourth Enhanced Surveillance Report for Greece.

Since July this year and for the first time since 2002, no euro area Member State is under the Excessive Deficit Procedure. The euro area debt-to-GDP ratio is expected to continue its declining path of recent years and to fall from about 86% in 2019 to about 85% in 2020. This is happening against the backdrop of a weakening European and world economy.

Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, said: “With mounting risks weighing on Europe’s economic growth prospects, it is reassuring to see euro area countries like Germany and the Netherlands using fiscal space to support investment. However, there is scope for them to do more. On the other hand, Member States with very high levels of debt – such as Belgium, France, Italy and Spain – should take advantage of the lower interest expenditure to reduce their debt. It should be their priority.”   

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “For the past five years, this Commission has carefully assessed the Draft Budgetary Plans of euro area Member States. With this year’s opinions, we confirm our commitment to a flexible, intelligent application of our common rules, guided by an awareness of the economic reality in each country and in the euro area as a whole. In that sense, the Commission invites countries with high debt to pursue prudent fiscal policies, while encouraging those with fiscal space to invest further. This differentiated approach will strengthen the euro area.”

Assessment of the Draft Budgetary Plans of the euro area Member States

Following the recent Autumn 2019 Economic Forecast and consultations with the Member States, the Commission has adopted its Opinions on the Draft Budgetary Plans of all euro area countries. It has found that no Draft Budgetary Plan for 2020 shows particularly serious non-compliance with the requirements of the Stability and Growth Pact. Nine Member States’ Plans are compliant with the Stability and Growth Pact in 2020; two Member States are broadly compliant and for eight Member States, the Plans pose a risk of non-compliance with the Stability and Growth Pact next year.

The Draft Budgetary Plans of Germany, Ireland, Greece, Cyprus, Lithuania, Luxembourg, Malta, the Netherlands and Austria are found to be compliant with the Stability and Growth Pact in 2020.

The Draft Budgetary Plans of Estonia and Latvia are found to be broadly compliant with the Stability and Growth Pact in 2020. The implementation of the Draft Budgetary Plans might result in some deviation from the country’s medium-term budgetary objective for Latvia and from the adjustment path towards this objective in the case of Estonia.

For Belgium, Spain, France, Italy, Portugal, Slovenia, Slovakia and Finland the Draft Budgetary Plans pose a risk of non-compliance with the Stability and Growth Pact in 2020. The implementation of the Plans of these Member States might result in a significant deviation from the adjustment paths towards the respective medium-term budgetary objective. In the cases of Belgium, Spain, France and Italy, non-compliance with the debt reduction benchmark is also projected.

Overall, between 2019 and 2020, the number of Member States at or above their medium-term budgetary objectives is estimated to increase from six to nine. The Commission projects the euro area aggregate structural deficit to increase by 0.2% of potential GDP in 2020 (to -1.1%), thus showing a broadly neutral fiscal stance. That increase in the structural balance is driven in particular by projected expansionary fiscal policies in Member States with fiscal space, particularly the Netherlands and to a lesser extent Germany (0.6% and 0.4% of potential GDP, respectively) and the projected increase in the structural deficit of Italy (0.3% of potential GDP). Overall, fiscal policies continue to be insufficiently differentiated across the euro area. Member States with fiscal space are implementing expansionary fiscal policies and should stand ready to continue using their fiscal space. By contrast, the lack of consolidation in countries with sustainability problems remains a concern.

Steps under the Stability and Growth Pact

The Commission has also taken a number of steps under the Stability and Growth Pact for Hungary and Romania.

It has made two recommendations under the Significant Deviation Procedure, a tool which intends to send a warning in case of a significant deviation from the requirements of the preventive arm of the Pact. The Procedure also aims to help Member States return to – or close to – the fiscal position they would be in if the deviation had not occurred.

For Hungary, the Commission has established that no effective action was taken in response to the Council recommendation of June 2019. It proposes that the Council adopt a decision on non-effective action and a revised recommendation to Hungary to take measures in 2020 to correct its significant deviation from the adjustment path towards the medium-term budgetary objective. For Romania, the Commission has established that no effective action was taken in response to the Council recommendation of June 2019. It proposes that the Council adopt a decision on non-effective action and a revised recommendation to Romania to take measures in 2020 in order to correct its significant deviation from the adjustment path towards the medium-term budgetary objective.

Enhanced Surveillance Report for Greece

The Commission has also adopted the fourth report for Greece under the Enhanced Surveillance framework that was activated following the conclusion of the European Stability Mechanism stability support programme in August 2018. The publication of the report follows the fourth post-programme mission to Greece which took place from 23 to 26 September 2019.

The report concludes that Greece has prepared a budget for 2020 that meets the agreed primary surplus target of 3.5% of GDP in a growth-friendly manner, and that the government has overall taken the necessary actions to achieve its specific reform commitments for mid-2019, in the context of advancing a broader reform agenda. Further actions will be crucial to complete, and where necessary accelerate, reforms.

The findings of this report will be discussed at the Eurogroup of 4 December 2019.

What are the next steps?

The Commission invites the Eurogroup and the Council to discuss today’s package and endorse the guidance offered today. The Commission will come forward with the next steps under the European Semester in due time, including the Annual Growth Survey 2020, the recommendation for the economic policy of the euro area, the Alert Mechanism Report, and the Draft Joint Employment Report.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Von der Leyen announces the start of HERA Incubator to anticipate the threat of coronavirus variants

This 12-year-old built an underwater robot to fight plastic pollution

A 10-step plan to save our seas

5 facts you might not know about why forest biodiversity matters

EU budget 2021: An annual budget focused on European recovery

“Fortress Europe”, “Pegida” and its laughing stocks

Greece returns to markets at a high cost to taxpayers, after four years out in the cold

Ecuador: UN ‘stands ready’ to support talks, in bid to end political turmoil

Civilians ‘must never be a target,’ says UN in Afghanistan, amid troubling number of casualties during Ramadan

How do you make supply chains more visible without compromising security? A Dutch start-up may have the answer

How trade-based money laundering works and its impact on world finances

Disillusioned young people – France thinks it has a solution

UN chief praises Japanese climate resilience, as Typhoon Hagibis cleanup begins

More children killed by unsafe water, than bullets, says UNICEF chief

New research reveals the true extent of corruption in fisheries

We must stop a devastating ‘battle to the end’ in southwest Syria, declares UN envoy

DiscoverEU: 20,000 more young people will explore Europe in 2020

These are the 3 key skill sets workers will need to learn by 2030

UK: Crawley group wins European Citizens’ Prize

Did Draghi ask the Germans to accept a drastic change of austerity policies?

Joint European Union-United States Statement on addressing global steel and aluminum capacity

New General Assembly President brings ‘valuable insights’ into key UN challenges

3 vital skills for the age of disruption

The UN supports Europe’s military action in Libya and the Mediterranean; Russia and China agree

Europe turns out more jobs this summer

COP21 Breaking News_03 December: Europe’s children urge leaders to commit to climate action at UN Climate Summit in Paris

In aftermath of Libya airstrike deaths, UN officials call for refugees and migrants to be freed from detention

CHINA: five letters that could mean…

The world just took a step closer to eradicating polio

‘Harmonized’ plan launched to support millions of Venezuelan refugees and migrants

Here’s what a Korean boy band can teach us about globalization 4.0

Presidents of pan-European youth organisations call upon the European Council to preserve the Schengen principles

5 lessons for the future success of virtual and augmented reality

Germany is the world’s most innovative economy

EU Migrant Crisis: Italian Coast Guard Headquarters and Italian Navy to give host national opening addresses at Border Security 2016 in Rome

United States: UN chief ‘deeply saddened’ by deadly California wildfires

The price of centralization of human resources for health

Denmark is experimenting with ‘culture vitamins’ to lift people out of depression

How banking with blockchain can stamp out corruption and increase financial inclusion

African cities will double in population by 2050. Here are 4 ways to make sure they thrive

Europe bows to Turkey’s rulers, sends Syrian refugees back to chaos

These countries are driving global demand for coal

Bolivia: UN underlines support for ‘credible, transparent and inclusive’ election

Coronavirus: Commission issues guidelines on testing

A letter from Italy: Our insecurity in COVID-19 times

ICC Appeals Chamber acquits former Congolese Vice President Bemba from war crimes charges

The racial wealth gap in the US is affecting its citizens and its economy – this is how

Eurozone set to abandon monetary and incomes austerity and adopt growth friendly policies

Friday’s Daily Brief: human rights in Sudan, sombre anniversaries for Rwanda and Nigeria, and fears of ‘chaos’ in Libya

Business can be profitable AND drive progress on societal priorities

COVID19 a wake-up call to address development fault lines in Asia and the Pacific

EU, Canada and China co-host international meeting on climate cooperation and a sustainable economic recovery

Why building consumer trust is the key to unlocking AI’s true potential

How populist and xenophobic movements in the EU tear apart European businesses and startups

Mergers: Commission opens in-depth investigation into proposed acquisition of GrandVision by EssilorLuxottica

Protecting citizens’ access to social security in case of no-deal Brexit

Amid strong outlook for U.S. economy, risks abound

How can emerging economies navigate the mobility transition?

Vaccine nationalism – and how it could affect us all

Who is culpable in the EU for Ukraine’s defection to Russia?

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s