EU leaders to turn a blind eye to Commission’s fiscal stimulus call

Pierre Moscovici, EU Economic Affairs Commissioner, and Jeroen Dijsselbloem, president of the Eurogroup, after the last meeting where a majority of ministers did not support the Commission's proposal. [European Council]

The European Council is expected to ignore the Commission’s call for €50 billion in eurozone stimulus, seen by the Commissioners as an “ambitious” step toward a budgetary union.

The latest draft summit conclusions include a five-paragraph section on economic matters, where the EU’s heads of state and government will welcome the extension of the European Fund for Strategic Investment, as well as supporting more funds for the Youth Guarantee scheme and calling for Single Market barriers to be eliminated.

They will also ask for initiatives to strengthen the European industrial base and will call for the adoption of recent initiatives put forward by the European Commission to continue with financial sector reform.

However, the text does not make any reference to the positive fiscal stance for the euro area proposed by the executive on 16 November.

The proposal was relevant because for the first time after five years of austerity policies, the executive called for a timid fiscal push to relaunch Europe’s weak recovery. But also because the institution set a global target for the euro region as a whole.

Brussels makes timid fiscal push to reverse austerity, counter populist wave

The European Commission stepped up its efforts to leave austerity behind on Wednesday (16 November) by advocating for the first time a timid expansionary fiscal policy for the eurozone and forgiving Spain and Portugal for breaching EU budget rules.

Commissioner for Economic Affairs Pierre Moscovici emphasised that it was the first time that the institution came up with a joint fiscal target for the eurozone. “There is no question that this is a step towards deepening the euro area, an ambitious step for the euro area, and it is a step towards a form of a budgetary union,” he told reporters.

But the leaders seem to disregard the importance of this step to the extent that the draft conclusions did not even “take note” of the proposal, the cautious wording used for controversial initiatives that need to be further assessed.

A European source explained that it was never expected that the conclusions would include a reference to the fiscal stance.

The leaders’ silence came after their ministers of finance gave a lukewarm response to the Commission’s proposal.

Eurogroup ignores Commission’s expansionary fiscal target

Some eurozone members have expressed their willingness to invest more but did not take on board the executive’s proposal for a common positive fiscal stance to boost the bloc’s recovery, at a Eurogroup meeting held today (5 December).

During the Eurogroup meeting, a majority of euro members rejected the call for a positive fiscal stance. Only Italy, France, Spain, Portugal and Greece supported the idea.

Moreover, the chief of the new European Fiscal Board, Niels Thygesen, who will advise the Commission on the fiscal stance for the bloc, told the ministers that the proposal lacked enough analysis.

European Fiscal Board chief: Commission's analysis 'made a bit too quickly'

The new European Fiscal Board began working just as the European Commission took the unprecedented step of proposing a fiscal target for the eurozone. The Board’s chief, Niels Thygesen told that the Commission should have done “more analysis” before proposing an expansionist stance.

Commission spokesperson for Economic Affairs Annika Breidthardt said that the Eurogroup’s discussion “confirmed that there are differing views on the issue”.

But she welcomed that the finance ministers had for the first time a “meaningful debate” on the need for a common fiscal orientation for the eurozone as a whole.

The discussion also showed that “there are European solutions at hand to help bring about a better rebalancing of the policy mix in the euro area”, she added.

The European Commission describes the concept of ‘fiscal stance’ as the discretionary fiscal policies in a budget. Governments can decrease (contractionary stance), increase (expansionary stance) or leave unchanged (neutral stance) its budgetary policies. Discretionary fiscal policies exclude the so-called ‘automatic stabilisers’, such as unemployment insurance or social security – as well as the interest paid on public debt.

A proper eurozone or EU fiscal stance does not actually exist today, given the absence of any real euro area or EU-level fiscal instrument to manage the overall fiscal stance of the Member States, such as a budget for the eurozone. Therefore, the concept of a euro area or EU fiscal stance refers only to the simple aggregation of individual Member States’ fiscal stances.


  • 15 December: European Council

European Commission: communication on a positive fiscal stance for the eurozone

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