The Eurogroup joins the request that the European Commission issued almost two months ago and demands from Spain its budget plan for the next financial year. The ministers of Economy and Finance of the eurozone have demanded this Monday the governments that have not yet presented their accounts for 2025, Let them do it as soon as possible. A list of three countries in which Spain finds itself in an exceptional situation, as it is the only one that does not have a government in office after an electoral call.
In a joint statement, the heads of the Eurozone Economy have pointed out: “we hope that the medium-term plans and the pending draft budget plans will be presented as soon as possible.” Spain, along with Belgium and Austriaare the only three euro countries that have not yet submitted their budget plans to Brussels. If in the case of Spain the difficult parliamentary arithmetic has made it difficult to prepare accounts for next year, the justification of the other two countries lies in a government in office and the calling of elections.
“A shared currency implies shared responsibilities“, highlights the statement. Therefore, the Eurogroup highlights the importance of the “effective” application of the new fiscal rules, which begin to be applied in 2025 and before whose application the countries had to present their fiscal plans and their budget plans. economic governance framework “facilitates a strategy of gradual fiscal consolidation, while supporting investment and reforms, and promoting sustainable economic growth, thus improving fiscal sustainability throughout the euro area”, point out the heads of Economy in their joint declaration.
Countries had to submit their budget plans to the European Commission by October 15. The Minister of Economy, Carlos Body, warned that the Government would be delayed in its delivery and justified such delay by the fact that Brussels does not want budget extensionsa condition that would really apply to incumbent governments and countries in electoral processes, as is the case of Belgium and Austria.
The same does not occur with the structural fiscal plan, which the Government sent to the Community Executive on October 15 and which establishes a deficit target of 0.8% by 2031. To date, Germany, Belgium, Austria and Lithuania have yet to deliver this four-year roadmap to Brussels, which can be extended to seven years.
Already at the Eurogroup in October, just a few days before the deadline of October 15, the previous Commissioner for the Economy, Paolo Gentiloni, warned Spain that the European Commission flexibility is “limited”. It indicated that such flexibility was limited to a matter of days, in no case weeks or months. In addition, it highlighted the importance of presenting, along with the fiscal plan, the accounts for 2025, since the first document without the support of the second runs the risk of becoming a dead letter.
Slightly contractionary fiscal policy
The Eurogroup changes its analysis of the orientation for next year’s fiscal policy. If in July, the euro’s Economy and Finance Ministers raised their tone with respect to March and called for a “contractive” fiscal policy for the next year, the message relaxes again and points in the same direction as in March, so that it is “slightly contractive.”
“The Commission’s assessment of the budget plans points to a slightly contractionary budget stance in 2025 in the euro area, driven by the restriction of public spending, together with a growth in public investment. This is appropriate in the current situation, taking into account the high levels of deficit and debt in the euro area and the need to support the current disinflation process,” the Eurogroup indicated in its joint statement.
Furthermore, the Eurogroup welcomes greater fiscal adjustment in those Member States that face greater fiscal challenges. He has also expressed satisfaction that “public investment in the euro area maintains its upward trend” and, they add, “investment remains essential for a competitive and resilient economy.”
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