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.

Advertising

Advertising

Advertising

Advertising

Advertising

the sting Milestone

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

Ahead of State of the Union the European Youth Forum highlights lack of action on youth employment

Africa’s inspiring innovators show what the future could hold

Teamgum @ TheNextWeb 2014

Amazon on fire: the interference in global health

Nigeria: UN chief ‘appalled’ by killing of aid worker; calls for release of remaining hostages

Partnerships with civil society and youth ‘essential’ for a future that leaves no one behind: General Assembly President

Athens searches frantically for a new compromise between politics and economic reality

Thursday’s Daily Brief: Albinism, displacement in Central America, family-friendly nations, updates on the Gulf and Darfur

Facebook engineer working at the company’s HQ, Menlo Park, CA (Copyright: Facebook Inc., Source: Facebook Inc.’s website, newsroom)

Facebook goes under formal EU privacy scrutiny after latest massive data breach

Four ways innovation can help to beat heart disease

Foreign Investment Screening: new European framework to enter into force in April 2019

Trump badly cornered at home by agribusiness and steel consumer lobbies: Trade

Central America: drought, resulting crop losses threaten food security of two million people, UN warns

OECD, BSR and Danone launch 3-year initiative to strengthen inclusive growth through public-private collaboration

Here’s how to make ‘value-based healthcare’ a reality

Yemen: Tackling the world’s largest humanitarian crisis

The growing cyber-risk to our electricity grids – and what to do about it

Antitrust: Commission consults stakeholders on guidance for national courts when handling disclosure information

The European Union is strengthening its partnership with Senegal with €27.5 million

We must move from egocentric to ecocentric leadership to safeguard our planet

European Youth Forum welcomes the European Commission’s proposed revision of the Union Code on Visas, however it does not go far enough

Measles in Europe: infection rates highest in a decade, says UN health agency

5 neuroscience hacks that will make you happier

Family incomes stagnate in the EU; people excluded from ‘moderate recovery’

COP21 Paris agreement: a non legally-binding climate pact won’t stop effectively global warming while EU’s Cañete throws hardest part to next Commission

We need a global convention to end workplace sexual harassment

Half the population of Yemen at risk of famine: UN emergency relief chief

UN report on Syria conflict highlights inhumane detention of women and children

IMF: Sorry Greece, Ireland, Portugal we were wrong!

Is it impossible to place the banks under control?

Larger species are more at risk of extinction than smaller ones – here’s why

Currency Union might not let an independent Scotland join the EU as the “Yes” front now leads

Scotland “shows the way” to separatist movements as Catalonia calls a vote on independence

IMF: When high yield goes boom

To Brexit or not to Brexit: British exceptionalism doesn’t allow any Obama telling Brits what to do

Reading this alone? Recent surveys reveal the curious truth about loneliness

Migration crisis update: lack of solidarity not only among EU leaders but also EU officials

Continue reforms to make growth work for all in Spain

Achieving targets on energy helps meet other Global Goals, UN forum told

Banks worth $47 trillion adopt new UN-backed climate, sustainability principles

Meet Alice, the battery-powered plane that could herald the age of electric air travel

State aid: France to recover €8.5 million of illegal aid to Ryanair at Montpellier airport

How microfinance develops decent work

Humane leadership must be the Fourth Industrial Revolution’s real innovation

The new ethical dilemmas in medicine of the 21st century

Countdown To GSMA Mobile World Congress Shanghai 2018 Is On

5 lessons for social entrepreneurs on how to change the system

Internet of Things: a Force for Good or Evil?

Human rights: breaches in Russia, the Rakhine State and Bahrain

Reading the smoke signals: The long-term consequences of Amazon wildfire on global health

UN experts warn Assange arrest exposes him to risk of serious human rights violations

Britain’s May won the first round on the Brexit agreement with the EU

Secretary-General condemns attacks on UN peacekeepers in Mali

In 2020 Asia will have the world’s largest GDP. Here’s what that means

Everything you need to know about water

Fairer food supply chain: Agriculture MEPs clamp down on unfair trading

How innovation from within is transforming International Organizations as well as lives

MWC 2016 LIVE: BT chief aims to be at UK 5G forefront

Finland should do more to improve job prospects of low-skilled youth

European Parliament and Eurovision sign partnership for European Elections

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