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

Italy’s dilemma after Merkel-Hollande agreed loose banking union

Nokia wins Commission’s approval for Alcatel-Lucent acquisition: a new way for antitrust cases?

9 steps to bridging the net-zero funding gap

Innovating together: connectivity that matters

Quality coffee can boost local economies and benefit farmers – here’s how

What has changed in the French politico-economic horizon

Ambitions are affordable for Asia and the Pacific

Here’s how drone delivery will change the face of global logistics

European Youth Forum welcomes strong stance on human rights in State of the Union

UN food agency appeals for access to key storage facility amid fight for Hudaydah

Millions of young people need better job skills. Here’s how businesses can help

‘Leaders who sanction hate speech’ encourage citizens to do likewise, UN communications chief tells Holocaust remembrance event

4 ways to deliver social justice during the COVID-19 recovery

‘Global trust’ declining, ‘our world needs stepped-up global leadership’

Occupational safety and health in a changing world of work

Do not take the EP’s consent on MFF for granted, says Budget Committee Chair

Global spotlight on world drug problem ‘is personal’ for many families, says UN chief

Parliament gives green light to EU-Singapore trade and investment protection deals

UN global education envoy urges new funding for ‘lost generation’ of children forced out of classrooms by conflict

Our Amazon is disappearing in ashes

FROM THE FIELD: ‘Miraculous’ music made by hearing-impaired children

Bias in AI is a real problem. Here’s what we should do about it

Three ways China can make the New Silk Road sustainable

Why skills are keeping CEOs awake at night

EU mobilises emergency assistance following floods in Ukraine

How quantum computing could beat climate change

4 ways to build a net-zero economy by 2050

Coronavirus: EU makes available additional humanitarian funding of €41 million to fight the pandemic

Technology companies have power. They must assume responsibility

EU Copyright Directive: Will US tech giants comply or ditch the EU market?

To Fight the Pandemic, Put Trust and Cooperation Before Politics

The EU slowly exits from “Excessive Deficit Procedure” and hopefully from ‘Excessive Austerity Procedure’ too

Things are bad and getting worse for South Africa. Or are they?

200 women call on tech giants to prioritize online safety. Here’s how

Aid teams respond to escalating southwest Syria conflict: 750,000 civilians are at risk

Libya: Attack on foreign ministry, an attack on all Libyans, stresses UN envoy

Mobility package: Parliament adopts position on overhaul of road transport rules

2020 EU Budget: Performance report highlights swift and global EU response to the coronavirus crisis while supporting key EU priorities

European Youth Forum welcomes establishment of new Youth Intergroup in the European Parliament

Take-home pay growing at lowest level since 2008, as gender-gap persists: UN labour agency

FROM THE FIELD: A UN peacekeepers-eye view of DR Congo

EU-Ukraine Summit: Moving Forward Together

MEPs oppose EU Commission plans to authorise three herbicide-resistant GMOs

Afghanistan: lead MEPs demand safe departure of EU nationals and Afghan partners and urgent tackling of humanitarian crisis

Here’s how sustainable aviation fuel can take off in Europe

A Sting Exclusive: “EU’s Sustainable Finance Action Plan – Laying down the foundations for a Greener Financial System”, by European Commission’s Vice-President Dombrovskis

4 myths about corruption

Climate change and health: public health awareness in an international framework

Wednesday’s Daily Brief: Diplomacy for Peace Day, #VaccinesWork, the cost of war on Afghans, tech and well-being

VAT: New e-commerce rules in the EU will simplify life for traders and introduce more transparency for consumers

Impressions of China

Five things everybody needs to know about the future of Journalism

OECD Secretary-General Gurría welcomes announcement of new trade agreement between the US, Mexico and Canada

A year on from Yemen talks breakthrough, top UN Envoy hails ‘shift’ towards peace, despite setbacks

LGBTQI+ and medicine, in the Land of the Pure

Protecting the ocean is key to fighting climate change

Asian and Pacific economies: decreases in tax revenue highlight need to broaden tax bases

New UN Global Climate report ‘another strong wake-up call’ over global warming: Guterres

This is how to make driving an EV more accessible and affordable

Banking on sunshine: world added far more solar than fossil fuel power generating capacity in 2017

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

%d bloggers like this: