EU package to boost economic growth - Bloc adopts "tight" fiscal policy next year
The European Union (EU) Commission presented the autumn package to guide economic growth, underlining that the eurozone will adopt a tighter fiscal policy in 2025. The bloc will also launch excessive deficit procedures for eight member states. , including France and Italy.
The package is part of the EU's new economic governance framework that was put in place in April and uses a single operational indicator, the multi-year net spending path of each member state that includes fiscal, reform and investment targets. It states that the fiscal situation in the Eurozone is expected to tighten slightly in 2025 and the outlook for economic growth remains challenging.
The forecast projects that growth will recover gradually, driven by domestic demand, while inflation will fall and the labor market will remain strong, but geopolitical tensions and uncertainty will be present on the horizon.
The package notes that some EU countries have significantly increased public debt and pushed their fiscal deficits to higher levels in order to recover from the energy crisis suffered during the ongoing Russia-Ukraine conflict that erupted earlier this year. 2022.
The plan includes an excessive deficit procedure against eight member countries, namely Belgium, France, Hungary, Italy, Malta, Poland, Romania and Slovakia. These countries are required to take effective action to reduce their deficits within a certain period of time, or risk being fined.
The excessive deficit procedure is the so-called "corrective arm" of the Stability and Growth Pact, which stipulates that the annual fiscal deficit of an EU member state must not exceed 3 percent of Gross Domestic Product and the public debt must not must exceed 60 percent of GDP.
The commission has so far received medium-term plans from 22 of the bloc's 27 member states and has completed the evaluation of 21 of the plans submitted. He estimated that 20 of them meet the requirements, although the draft budget plan of the Netherlands for 2025 and the medium-term financial plan were not approved, as the country plans an average increase in net spending of 4.2 percent during the years 2025-2028, higher than the limit of 3.2 percent provided by the Commission.
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