Eurogroup confirms that all euro countries should limit energy aid to the most vulnerable

The direct budgetary cost of measures taken this year 1.3% of GDP eurozone. Given that many of them expire in early 2023, the cost could be capped at 0.9% next year, but Eurogroup acknowledges it could “increase significantly” if it is finally extended all year. They therefore point to their shared commitment to ensure that support is “more efficient, better coordinated and at the same time affordable” in the future. “In 2023, we will review our measures to ensure they target and focus on temporarily exposed vulnerable households and viable businesses.”

And as the commissioner for economic affairs warned, Paolo Gentiloni“If existing measures are extended or new ones come into effect, budget deficits could increase significantly than expected. And that would go against the European Central Bank’s efforts to reduce inflation,” he said. Easter Donohoe Another two and a half years as head of the Eurogroup. Donohoe reminded that they will work “month to month” to improve the quality of the measurements.

two-level system

The Eurogroup raises the possibility of creating a “well-calibrated two-tier energy pricing model” and “other regimes that achieve similar goals, taking into account national characteristics”. The system should make it possible to reduce Russia’s energy dependence and accelerate the decarbonisation of the economy, while maintaining the price signal to reduce energy consumption and encourage investments in future energy infrastructure, including energy efficiency, interconnections, storage and innovative renewable technologies.

“We will continue to coordinate our fiscal policy response regarding energy support in the euro area, and at our next meetings we will continue to discuss a common approach for households, including a reflection on appropriate ways to reduce support.” state. . In line with this discussion, the Vice President and Minister of Economy, Nadia Kalvinoconfirmed that they are currently examining how to limit energy aid. “The government is considering a range of measures to see which should be extended beyond 31 December and which should end or be tailored to a particular group.”

technical recession

In the statement, euro countries endorse Brussels’ macroeconomic analysis and warn that eurozone countries and most member states “are at risk of experiencing a technical recession this winter”. The reason: slowing activity due to higher pressures on energy prices, eroding household purchasing power, a weaker external environment and tighter financing conditions. Although growth is expected to return in the spring, macroeconomic forecasts are surrounded by great uncertainty.

According to them, the eurozone deficit will continue to shrink to 3.5% of GDP in 2022, but is expected to increase to 3.7% of GDP in 2023. Some figures that hide very different truths. The number of Member States with deficits above the threshold of 3% of GDP will increase from 10 to 12 between 2022 and 2023. Meanwhile, eurozone public debt will fall to 92% of GDP next year, still well above pre-2022 levels. covid crisis. The statement lauds the statement that “public investment expenditures are trending upwards in most Member States”, largely thanks to the recovery plan. when it comes budget plansThe Eurogroup is a “part of the Member States with high debt levels”. prudent fiscal policy, in particular by limiting the growth of nationally funded non-interest current expenditure”. Meanwhile, countries with low/medium debt levels will have to aim for “neutral fiscal policy”.