Eurozone and EU finance ministers are in Brussels today and tomorrow for the meetings of the Eurogroup and the ECOFIN Council. Today, Executive Vice President Dombrovskis and Commissioner Gentiloni represent the Commission at its meeting Eurogroup. Ministers took stock of macroeconomic and fiscal developments in the euro area and exchanged views on the “fiscal policy guidelines” presented by the Commission on 8 March, with a view to issuing a statement.

Ministers also discussed inflation developments in the euro area and sought to approve euro area-related aspects of the review of economic governance.

Finally, the Eurogroup exchanged views on strategic objectives for the digital euro and discussed global economic policy coordination ahead of the upcoming spring meetings of the World Bank Group and the International Monetary Fund.

“We are gradually moving to more targeted measures that are more accessible, with improved design, efficiency and affordability. Unless there are new price shocks, we will continue to phase out energy support measures, which will also help reduce government deficits,” the Eurogroup statement said.

The ministers also note that “prudent fiscal policy will help ensure the stability of the Eurozone economy and facilitate the effectiveness of monetary policy measures in a high inflation environment. In light of the economic outlook and in a context of high inflation and tighter financing conditions, we reiterate that broad fiscal stimulus to aggregate demand is not justified.”

Looking ahead, finance ministers said they would continue coordination efforts ahead of next winter. “To the extent that further action is required, we will continue to protect the most vulnerable households and viable businesses, while maintaining incentives to reduce energy consumption and increase energy efficiency.”

Today’s Eurogroup discussed the new 2024 guidelines for fiscal policy as the escape clause expires.

According to the European Commission’s proposal for changes to the “Stability Pact” for each country there will be new quantitative rules, depending of course also on the particularities of its debt, which should be under the umbrella of the basic rules for a smaller deficit of 3% and debt up to 60% of GDP.

The Commission says it is ready to propose country-specific recommendations on fiscal policy for 2024, which will:

1) They are in line with the fiscal targets set by the Member States in their stability and convergence programmes, as long as these targets are consistent with ensuring that the public debt ratio is on a downward trajectory or remains at a prudent level and that the fiscal deficit is lower from the reference value of 3% of GDP in the medium term.

2) They are quantified and differentiated based on the public debt challenges faced by Member States.

3) They are formed on the basis of net primary costs.

Tomorrow, Executive Vice-President Valdis Dombrovskis and Commissioners Johannes Hahn responsible for the budget, Paolo Gentiloni for the economy and Mareide Maguñez for financial affairs will represent the Commission at the Council meeting ECOFIN.

First, the Commission will present the “fiscal policy guidelines for 2024”. Ministers will then exchange views on the review of economic governance. They will also take stock of the implementation of the Recovery and Resilience Mechanism and issue an implementing decision on Finland’s revised national plan.

Ministers will seek to adopt conclusions on the “directions for the EU budget in 2024”, as well as to adopt a recommendation, on the discharge of the Commission in respect of the implementation of the general budget for the financial year 2021.

The Commission will brief ministers on the economic and fiscal consequences of Russia’s invasion of Ukraine, and in particular on developments in energy-related financial markets. In addition, the Swedish Presidency of the Council and the Commission will inform the ECOFIN Council about the results of the meeting of G20 Finance Ministers and Central Bank Governors on 24-25 February 2023, with a view to preparing the next international meetings from 10 until April 16, 2023.