As the pressures on the energy pricesall Member States will have to phase out the energy support measures. It is the commitment reached this Monday at their monthly meeting by the Ministers of Economy and Finance of the Eurozone that, in a joint statement, they recognize that “a generalized fiscal stimulus is not justified& rdquor; and that the focus will have to be placed in 2023 “on protecting the most vulnerable homes and companies & rdquor; although with “agility & rdquor; to adapt to the situation. The text, about budget plans in 2023accepts the Brussels analysis of the Spanish budget plan as good, although it warns that countries with high debt levels should apply a prudent fiscal policy.
The direct budgetary cost of the measures taken this year is estimated at 1.3% of euro area GDP. Given that many will expire at the beginning of 2023, the cost next year could be limited to 0.9% although the Eurogroup acknowledges that “it could increase significantly & rdquor; if they were finally extended throughout the year. Hence the joint commitment to guarantee that the support will be “more efficient, better coordinated, and at the same time, fiscally affordable” in the future, they point out. “In 2023 we will review our measures to ensure that they are targeted and focused on vulnerable households and viable businesses that are temporarily exposed & rdquor ;, they add.
And it is that, as the commissioner for economic affairs has warned, Paolo Gentiloni, “if existing measures are extended or new ones enacted, deficits could rise significantly more than anticipated. And this would go against the efforts of the European Central Bank to curb inflation & rdquor ;, he said after the meeting that he has re-elected “by consensus & rdquor; to the irish Paschal Donohoe as president of the Eurogroup for another two and a half years. Donohoe recalled for his part that they will work “month by month & rdquor; to improve the quality of the measurements.
two level system
The Eurogroup raises the possibility of establishing a “well-calibrated two-tier energy pricing model & rdquor; and “other regimes that achieve similar objectives taking into account national characteristics & rdquor ;. The system should make it possible to reduce Russia’s energy dependence and accelerate the decarbonisation of the economy while preserving the price signal to reduce energy consumption and incentivize investments in energy efficiency, future-proof energy infrastructure, including interconnections, storage and innovative renewable technologies.
“We will continue to coordinate our fiscal policy response in relation to support for energy in the euro area and we will continue to discuss in our next meetings a common approach for households, including a reflection on the appropriate ways to reduce support & rdquor ;, they state. . In line with this debate, the vice president and minister of economy, Nadia Calvino, has confirmed that they are already studying how to limit energy aid. “The Government is evaluating the set of measures to see which ones should be extended beyond December 31 and which ones should end or be adapted to a group & rdquor; determined, explained.
technical recession
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In the statement, the euro countries endorse the macroeconomic analysis of Brussels and warn that the countries of the Eurozone and most of the Member States “are at risk of experiencing a technical recession this winter & rdquor ;. The reason: a slowdown in activity due to high pressures on energy prices, the erosion of household purchasing power, a weaker external environment and tighter financing conditions. Although “growth is expected to return in the spring& rdquor; macroeconomic forecasts are surrounded by great uncertainty.
According to them, the euro area deficit will continue to decline in 2022 to 3.5% of GDP, although it is expected to increase in 2023 to 3.7% of GDP. Some figures that hide very different realities. The number of Member States with deficits above the 3% of GDP threshold will increase from 10 to 12 between 2022 and 2023. Meanwhile, euro area public debt will fall next year to 92% of GDP, still well above from the level prior to the covid crisis. The statement celebrates the fact that “public investment spending has followed an upward trend in most Member States”, thanks in large part to the recovery plan. As for the budget plansthe Eurogroup warns that Member States with high debt levels “must apply a prudent fiscal policy, in particular by limiting the growth of primary current spending with national financing& rdquor ;. Countries with low/medium debt levels, meanwhile, will have to aspire to “a neutral fiscal policy & rdquor ;.