Eurogroup statement on the draft budgetary plans for 2025

The euro area economy has shown remarkable resilience in recent years despite a challenging environment, reflecting a strong, coordinated and timely policy response. Economic growth should recover at a moderate pace as positive employment growth and improving financing conditions support consumption and investment. Sound and well-coordinated policies have ensured economic stability and helped to reduce inflation, which will support the recovery in real disposable incomes. However, geopolitical risks and political uncertainty have increased. Disruptive practices by some trading partners could adversely affect world trade and growth. Based on the Commission's autumn forecast for the period 2024-2026, we expect a gradual decline in the euro area government deficit and a slight increase in the public debt ratio, although it will remain well below its 2020 peak.

We welcome the submission of the first medium-term fiscal structural plans in line with the revised economic governance framework, as well as the submission of draft budgetary plans for 2025, which represent the first concrete steps towards effective implementation of the new framework. We agree that the draft budgetary plans remain an essential element of fiscal policy coordination and will continue to contribute to the strength and coherence of the euro area and the EU as a whole. Going forward, the process of draft budgetary plans will be an important tool for multilateral fiscal surveillance and for the annual monitoring of net expenditure developments.

The Commission's assessment of the draft budgetary plans points to a slightly contractionary fiscal stance in the euro area in 2025, due to a reduction in net current expenditure together with continued growth in public investment. This is appropriate at the current juncture given the high deficit and debt levels in the euro area and the need to support the ongoing disinflationary process. We welcome that Member States with larger fiscal problems are planning a larger fiscal adjustment in line with the new framework. We also welcome that public investment in the euro area should continue its upward trend, reflecting the ongoing efforts to increase investment and the positive impact of European funds, notably through the Recovery and Resilience Facility. Investment remains essential for a competitive and resilient economy.

We take note of the Commission's views on the individual draft budget plans for 2025. The Eurogroup discussed the different levels of risk regarding compliance with the fiscal recommendations. The Eurogroup welcomes the draft budgetary plans, which it considers to be consistent with the fiscal recommendations. We call on Member States whose draft budgetary plans present compliance risks based on the Commission's assessment to be ready to take the necessary measures depending on the nature of the risks and to comply with the fiscal commitments. We look forward to the submission of the expected medium-term plans and draft budgetary plans as soon as possible.

A common currency brings with it common responsibilities. The Eurogroup therefore stresses the importance of effective implementation of the revised economic governance framework. This framework facilitates a strategy of gradual fiscal consolidation while encouraging investment and reforms and promoting sustainable economic growth, thereby improving fiscal sustainability across the euro area. As outlined in the recent Eurogroup statement on competitiveness, we are committed to improving the performance of our economy by increasing its productive capacity and strengthening its competitiveness through ambitious investment and well-designed structural reforms. The Eurogroup will continue to closely monitor economic and fiscal developments and strengthen its policy coordination.

europa.eu/ gnews - RoZ