Valdis Dombrovskis – Photo EC
(BRUSSELS) – The EU Commission adopted its ‘Autumn economic package’ Wednesday, setting out economic and social priorities and completing its assessment of eurozone states’ draft budget plans.
The package comes against a background of slow economic growth, geopolitical risks, and increased uncertainty – not least following the UK’s Brexit vote and last week’s US elections.
In this context, the Commission reports, all EU economies are expected to grow next year for the first time since the crisis; investment is beginning to pick up, but at a slow pace; average debt and deficit levels are decreasing; and growth is increasingly job-intensive, with 8 million jobs created since 2013 while unemployment continues to fall.
The EU executive calls on Member States to redouble efforts along the principles of a “virtuous triangle” of boosting investment, pursuing structural reforms and ensuring responsible fiscal policies, and in doing so, to put the focus on social fairness and delivering more inclusive growth.
For the eurozone, the Commission is calling for a significantly more positive fiscal stance for the currency area as a whole to overcome the risk of “low growth, low inflation”, and to support the monetary policy of the European Central Bank.
Its policy guidance in its ‘Annual Growth Survey’ is accompanied by a Communication on the euro area’s fiscal stance, a recommendation on the economic policy of the euro area, as well as a thorough analysis of economic, labour market and social conditions.
The Commission is also issuing its Opinions on the Draft Budgetary Plans of euro area Member States for 2017.
In the Communication, the Commission pushes for a “more positive fiscal stance” and says there is now a window of opportunity to achieve it. A positive fiscal stance refers both to the supportive, i.e. expansionary, direction that fiscal policy should take overall, and to the composition of the fiscal adjustment, in terms of the distribution of efforts across countries and of the types of expenditure and/or taxes behind it.
The recommendation on the economic policy of the euro area is for a fiscal expansion of up to 0.5% of GDP in 2017 for the euro area as a whole.
In its assessment of euro area Member States’ Draft Budgetary Plans, the Commission has found both Spain and Portugal at risk of non-compliance.
Portugal and Spain submitted their Draft Budgetary Plans as well as reports on action taken to bring their budgets back on track.
The Commission;s conclusion is that the Excessive Deficit Procedure in both Member States should be held in abeyance and, consequently, the event that required a proposal by the Commission to suspend parts of the European Structural and Investment Funds is no longer present – news welcomed by both countries.
