| ● Eurogroup | | | 13/03/2023 21:53 | MEETING | | | | | The Eurogroup adopted a statement on fiscal policy guidance. It exchanged views on inflation developments and on the strategic policy objectives of a digital euro. It also took work forward on the euro area-related aspects of the economic governance review. |
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Eurogroup
Eurogroup, 13 March 2023
Highlights from the Eurogroup meeting held in Brussels on 13 March 2023
Main results
Macroeconomic and fiscal developments in the euro area
The Eurogroup took stock of macroeconomic and fiscal developments in the euro area and exchanged views on the fiscal policy guidance for 2023 and 2024. On 8 March, the Commission adopted a communication providing member states with guidance on the conduct and coordination of fiscal policy in 2024.
The Eurogroup adopted a statement on fiscal policy guidance.
We agreed that fiscal policies should aim to ensure debt sustainability in the medium term while raising growth potential in a sustainable manner. We did recognise the need to address the green and digital transitions, but sent out important signals regarding the design of budgetary measures and the need to avoid permanent deficit increasing measures as an important element in preparation for budgets for next year.Paschal Donohoe, President of the Eurogroup
Eurogroup statement on the fiscal guidance for 2024Communication from the Commission of 8 March 2023European Semester: a guide to the main rules and documents (background information)Economic governance framework (background information)Preparation of international meetings
Ministers discussed key issues for global economic policy coordination, in preparation for the upcoming spring meetings of the World Bank Group and the International Monetary Fund. This included the standard stocktaking of exchange rate developments over past months.
In addition, the Commission briefed the Eurogroup on the February G7 meeting of finance ministers and central bank governors.
World BankInternational Monetary FundInflation developments in the euro area
The Eurogroup exchanged views on inflation developments, including drivers of inflation in the euro area and the situation in individual member states. The discussion built on a note from the Commission services, a secretariat issues note and the views of the European Central Bank.
This topic is never absent from our policy discussions, and today was an opportunity to take a deeper dive into the inflation figures, to look at the Commission's analysis, to take stock of a range of price pressures that are lingering even after energy prices have come down from their peak levels; and it also provided a further political opportunity for ministers to share their experiences in dealing with this great challenge and also to further develop best practice.Paschal Donohoe, President of the Eurogroup
Technical note on inflation in the euro area and the EUEconomic governance review
The Eurogroup returned to the euro area-related aspects of the economic governance review (EGR), and it endorsed the euro area-related parts of the draft Council conclusions on the EGR.
Economic governance framework (background information)Digital euro
Building on the statement agreed by the Eurogroup on 16 January, ministers exchanged views on the strategic policy objectives of a digital euro based on a secretariat issues note.
After many months of assessing the potential design of a digital euro ministers wanted to reflect on the bigger picture again ahead of a legislative proposal from the Commission and the ECB decision on whether to move to the next phase. We noted the reasons why the digital euro is a high priority for our monetary union. These issues involve matters such as consumer preferences, providing a public good in the form of pan-European payment solutions and how we can preserve and deepen European monetary and economic autonomy. We also confirmed that we will continue our work to provide a solid democratic and political basis for that project, and we touched upon some of the implications of granting legal tender status to the digital euro.Paschal Donohoe, President of the Eurogroup
Issues note on digital euroEurogroup statement on the digital euro project (press release, 16 January 2023)Digital finance (background information)Meeting information
Brussels
13 March 2023
15:00
Preparatory documents
Issues note on the digital euroTechnical note on inflation in the euro area and the EUDraft agenda, EurogroupDraft annotated agenda, EurogroupOutcome documents
List of participants
| ● Eurogroup | | | 13/03/2023 16:36 | Press release | | | | | The euro area economy has recovered strongly following the pandemic and has weathered the consequences of Russia’s war of aggression against Ukraine, in particular regarding the energy price shock. The economy entered 2023 on a healthier footing than previously expected despite high inflation. Energy prices have decreased significantly compared to the peak of last summer, even though they are still high by historical standards. Headline inflation appears to have peaked but is set to remain elevated for some time, with core inflation still moving upwards. Labour markets are performing strongly, with the unemployment rate at record low levels. Growth is nevertheless expected to remain subdued in 2023, and to pick-up gradually in 2024. While uncertainty surrounding the outlook, notably in relation to geopolitical and energy related factors, remains elevated, risks to growth appear more balanced than previously. This reinforces the need for fiscal policy to remain agile going forward. In providing forward-looking orientations for our budgetary policy, we take note of the Commission Communication of 8 March 2023 on fiscal guidance for 2024. We agree that over 2023-24, prudent fiscal policies should aim at ensuring medium-term debt sustainability, while raising potential growth in a sustainable manner and addressing the green and digital transitions and resilience objectives through investment and reforms. Fiscal policy will help to ensure the stability of the euro area economy and facilitate the effective transmission of monetary policy in a high inflation environment. In light of economic prospects and in a context of high inflation and tighter financing conditions, we reiterate that broad-based fiscal stimulus to aggregate demand is not warranted. We will therefore closely monitor the impact on aggregate demand and on the fiscal stance of additional energy support measures or the prolongation of existing ones, while also taking into account the uncertainty of the evolution of energy prices. We should avoid permanent deficit-increasing measures. Given the strong spill-overs in energy markets and for the euro area economies, we will coordinate our measures to preserve the level playing field and the integrity of the single market. Our measures so far have mitigated the initial excessive impact of the energy price shock on businesses and consumers, however, the fiscal costs weigh on public finances. We are gradually transitioning from broad-based support to more targeted measures with improved design, efficiency and affordability. Absent renewed price shocks, we will continue to phase out energy support measures, which would also contribute to reducing government deficits. Looking forward, we are determined to continue our coordination efforts ahead of next winter. To the extent further efforts are needed, we will continue to protect the most vulnerable households and viable firms, while preserving incentives to limit energy consumption and increasing energy efficiency. The only lasting solution to the energy crisis is to continue reducing the dependence on fossil fuels. In this context, we will focus on ensuring the timely implementation of reforms and investments, also in the framework of the Recovery and Resilience Facility and REPowerEU. We will continue our discussions on fiscal policy coordination in the euro area. |
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| ● Eurogroup | | | 13/03/2023 20:28 | Statements and remarks | | | | | We had a series of good discussions. We began by welcoming our new colleague from Cyprus, Minister Makis Keravnos, who updated us on the priorities of the new Cypriot government. We then moved on to a discussion on fiscal strategy for 2024, in light of the economic situation and the guidance in last week's communication from the Commission. You all have seen that we adopted a statement reflecting our strategic view on fiscal guidance for next year. This has become a key element of policy coordination in the Eurogroup as we discuss budgetary preparations and is an important ingredient into our national work. We agreed that fiscal policies should aim to ensure debt sustainability in the medium term while raising growth potential in a sustainable manner. We did recognise the need to address the green and digital transitions, but sent out important signals regarding the design of budgetary measures and the need to avoid permanent deficit increasing measures as an important element in preparation for budgets for next year. The discussion also saw broad recognition that there are two distinct issues: first, the agreement of our Eurogroup statement that was just published, and second, the discussion on changes to the economic governance framework, which is well underway. Our second item today was the preparation for international meetings. Commissioner Gentiloni debriefed us on the February G7 meeting of finance ministers and central bank governors, and we looked ahead to the April spring meetings that will take place in Washington. More than ever, it is important for us to have a common understanding of the key issues for the euro area as we participate in policy discussions with policymakers from all around the world. And there continues to be full consensus within the Eurogroup on exchange rate developments. We then moved on to a discussion on inflation. This topic is never absent from our policy discussions, and today was an opportunity to take a deeper dive into the inflation figures, to look at the Commission's analysis, to take stock of a range of price pressures that are lingering even after energy prices have come down from their peak levels; and it also provided a further political opportunity for ministers to share their experiences in dealing with this great challenge and also to further develop best practice. We then had a short discussion on the euro area specific elements of the economic governance review, notably with regard to draft budgetary plans and macroeconomic imbalances. It was a short discussion because we reached consensus on those particular elements and the ECOFIN Council conclusions tomorrow will contain a paragraph reflecting our common view. We then concluded our planned agenda items with a strategic discussion on the digital euro. This built on the statement we adopted in January and after many months of assessing the potential design of a digital euro ministers wanted to reflect on the bigger picture again ahead of a legislative proposal from the Commission and the ECB decision on whether to move to the next phase. We noted the reasons why the digital euro is a high priority for our monetary union. These issues involve matters such as consumer preferences, providing a public good in the form of pan-European payment solutions and how we can preserve and deepen European monetary and economic autonomy. We also confirmed that we will continue our work to provide a solid democratic and political basis for that project, and we touched upon some of the implications of granting legal tender status to the digital euro. Finally, we discussed the collapse of the Silicon Valley Bank in the United States, a situation that we continue to monitor carefully. The problems arise from the specific business model of the Silicon Valley Bank, and the picture here in Europe is very different. Our banks are overall in good shape. We have strengthened them enormously in recent years, and they are under the close supervision of national and European authorities, and the Basel framework is being applied to all EU banks. There is no direct exposure, therefore, to Silicon Valley Bank, but this is a reminder to us that shocks to the banking system can emerge at any time, how important it is to ensure the resilience of our banking system and how important, of course, it is to continue with our efforts to strengthen Banking Union. |
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