Pierre Moscovici – Photo EC
(BRUSSELS) – The EU Commission confirmed its rejection of Italy’s budget Wednesday, as it set out the EU’s economic and social priorities for 2019, and presented Opinions on EU states’ draft budgetary plans.
In its European Semester Autumn Package, the EU executive said economic growth would continue in all EU Member States, though at a lower rate.
Brussels confirms the existence of “particularly serious non-compliance” with the Stability and Growth Pact in the case of Italy. Greece, however, is integrated into the European Semester for the first time.
The 2019 European Semester cycle of economic and social policy coordination begins against a backdrop of sustained but less dynamic growth in a climate of high uncertainty. The Commission says much has been achieved since 2014 but more must be done to support inclusive and sustainable growth and job creation while enhancing the resilience of Member States’ economies.
Last year’s exceptionally favourable global economic situation and low interest rate environment helped to support growth, employment, debt reduction and investment in the EU and euro area. All EU Member States are forecast to continue growing, though at a slower pace, thanks to the strength of domestic consumption and investment.
Barring major shocks, Europe should be able to sustain above-potential economic growth, robust job creation and falling unemployment. The public finances of euro area Member States have improved considerably and the aggregate euro area public deficit is now below 1%.
However debt remains high in several countries. As the economy continues to grow, it is time to build up the fiscal buffers needed to cope with the next downturn and mitigate potential employment and social impacts.
“The EU economy continues to grow at a healthy clip,” said financial affairs Commissioner Pierre Moscovici: “Today’s policy advice from the Commission is about ensuring it stays strong and becomes more resilient because in an increasingly uncertain global context, we cannot take anything for granted. A sustainably prosperous euro area needs not only sound public finances but also competitive economies and inclusive societies.”
For four Member States Belgium, France, Portugal and Slovenia , the draft budgetary plans (DBPs) are seen as posing a risk of non-compliance with the Stability and Growth Pact in 2019.
Spain’s headline deficit however is projected to fall below 3% next year and the country is set to exit the Excessive Deficit Procedure, which means that Spain would become subject to the preventive arm of the Pact as of next year.
Memo on the European Semester Autumn Package
Communication on the 2019 Draft Budgetary Plans of the euro area
