Different voices, same objective. The leaders of the euro area, including the president of the Eurogroup, the European Commissioner for Economic Affairs, and the president of the European Central Bank, reminded euro zone members this Friday to prepare strict, restrictive budgets for 2024 before submitting proposals to Brussels within a month, by October 15. They urged careful planning that aligns with current monetary policy as the commission reviews each plan.
The Eurogroup chair stressed that the 2024 budgets should be cautious, restrictive, and consistent with changes in monetary policy to help keep inflation on a downward path. The remarks came during a press conference in Santiago de Compostela at the informal gathering of finance ministers hosted under the Spanish EU presidency in the Galician capital.
Even amid government formation challenges and questions about who will lead in the coming weeks, Spain must also present its plan to Brussels by October 15, regardless of whether the government is fully in place. The plan is likely to extend existing government accounts and will be assessed by the European Commission for adherence to Brussels-led austerity priorities.
fiscal policy
One day after the latest rate increase, a European Central Bank commissioner reaffirmed that fiscal policy should stay restrictive to support efforts to curb inflation and reduce debt and deficits. The message emphasized that this does not imply a halt in investment but a reallocation away from energy subsidies toward protecting the most vulnerable groups. The call urged member states to phase out subsidies that require public funding, a response to the lingering effects of the pandemic and the energy crisis.
Gentiloni praised Spain for moving toward a consensus on new fiscal rules before year-end, noting that no new text would be finalized at the current Ecofin informal meeting. Progress was seen as essential to enable further steps in negotiations.
Vice president Nadia Calviño signaled ambition for an ambitious program ahead of year-end. Under Spain’s presidency, the aim is to reach an agreement on a new fiscal framework featuring stable, gradual paths to reduce public debt while enabling targeted investments in the European agenda, with emphasis on green and digital priorities.
The Spanish presidency plans to present the initial agreement proposal at the next official Finance Ministers meeting in Luxembourg on October 17.
fiscal policy and the EIB presidency
Gentiloni highlighted Spain’s efforts toward a good agreement on fiscal rules before year-end. While no final text was issued in Santiago de Compostela, no decision was expected at the Ecofin informal meeting. The aim remains to gain momentum that will unlock further progress in the weeks ahead.
Calviño indicated a forward-moving agenda, seeking to deliver an ambitious program before year-end and to strike a framework of rules that balances debt reduction with strategic investments in Europe’s green and digital initiatives.
The plan is to present the first proposal at the next Finance Ministers meeting in Luxembourg on October 17, with a focus on stable, gradual debt reduction and continued investment in the European agenda.
Interest rates
The European Central Bank president reiterated that budget policy should stay somewhat restrictive to lower debt and deficit while fostering more public and private investment in the green and digital transition.
Lagarde spoke shortly before the ECB announced another rate move, addressing reporters alongside eurozone finance ministers. She noted that the current policy stance aims to bring inflation back to the 2 percent target, provided that inflation data remains within expectations. The central banker emphasized that if inflation worsens, the central bank would adjust the duration of restrictive rates accordingly. She did not speculate on whether rates have peaked, but she affirmed the commitment to price stability.
In summary, the authorities underscored the need for prudence in budget choices and money policy that support growth while keeping price pressures in check, with a shared goal of sustaining Europe’s economic resilience.