Brussels, 15 January 2024
IMF article IV: mission to the euro area
The International Monetary Fund (IMF) presented the outcome of its interim article IV staff visit to the euro area. The IMF review is expected to be concluded by June 2024.
Ministers also heard from the institutions on their assessment of the latest macroeconomic developments and outlook.
The article IV review of the euro area is a regular exercise in which the IMF reviews economic developments, consults with euro area policy-makers and provides targeted policy advice. The discussions in the Eurogroup are a valuable opportunity to exchange views on current developments and emerging challenges.
2024 euro area recommendation
Ministers discussed the draft recommendations on the economic policy of the euro area for 2024, ahead of their approval by the ECOFIN Council on 16 January.
Based on Commission recommendations, the Council addresses annual recommendations on economic policy to the euro area as a whole within the European Semester. The recommendations are first discussed in the Eurogroup and then formally adopted by the Council after endorsement by the European Council.
Draft Council recommendation on the economic policy of the euro area
The European Semester explained (background information)
2024 European Semester: Recommendation for the euro area (European Commission)
Economic and Financial Affairs Council, 16 January 2024
Euro area competitiveness
As part of the workstream on euro area competitiveness and building on a note prepared by the Commission, the Eurogroup held a second discussion on the external competitiveness of the euro area, with a focus on changes in energy prices in the euro area, their impact on the economy of the euro area and the policy responses going forward.
We recognise the need to reduce our exposure to global price fluctuations in the energy sector. And we recognise that this can only be done through coordination and through better integration. The main ways in which this can be achieved are the diversification of energy sources, the rolling out of renewable energy production, making progress in decarbonisation, and working on the interconnections in the European electricity markets.
Paschal Donohoe, President of the Eurogroup
Ministers welcomed Christian Zinglersen, the director of the EU agency for the cooperation of energy regulators (ACER), and Jeromin Zettelmeyer, Director of Bruegel, for their perspectives.
Commission note on developments of energy prices in the euro area and policy responses
EU agency for the cooperation of energy regulators
Eurogroup work programme for I/2024
The President of the Eurogroup presented the Eurogroup work programme, which covers the first half of this year. Ministers provided their views and endorsed it.
Our work programme for this semester is centred around four key priorities, what I call the 4Cs of Coordination, Capital Markets, Competitiveness, and our common Currency. This includes our work towards a statement on the future of the European capital and financial markets, which I intend to present to the Euro Summit in the spring.
Paschal Donohoe, President of the Eurogroup
Eurogroup work programme for the first half of 2024
Eurogroup work programme (background information)
Miscellaneous: Stocktaking on the ESM treaty ratification
The Eurogroup took stock of the state of play regarding the ratification of the agreement amending the treaty establishing the European Stability Mechanism.
Our banking system continues to be well capitalised. The Single Resolution Fund is, of course, fully built up, mutualised and available if necessary. Nonetheless, the non-ratification of this revised treaty means that our efforts to build a Banking Union continue to lack a common backstop to the Single Resolution Fund and continue to lack a powerful tool to help us deal with the effects of banking difficulty.
Paschal Donohoe, President of the Eurogroup
Meeting information
- Brussels
- 15 January 2024
Preparatory documents
Outcome documents
Press releases
- Remarks by Paschal Donohoe following the Eurogroup meeting of 15 January 2024 – 15 January 2024, 20:35
- Press briefing ahead of the Eurogroup meeting of 15 January 2024 – 9 January 2024, 11:42
Remarks by Paschal Donohoe following the Eurogroup meeting of 15 January 2024
Let me begin by acknowledging that this year we celebrate 25 years since the launch of the euro. These moments are a natural moment of stocktake, and across a quarter of a century, there have been many different questions posed, including about the future of the euro itself. But each time we managed to come up strong and with the right answers. And today we face new challenges that countries can’t address alone. This is the role and the contemporary rationale of the European Union, how we use interdependence as a source of strength.
We are within the Eurogroup working on many of the economic aspects of this – how we can strengthen our European capital markets, how we can improve our competitiveness and security, how we can bring the single currency into the digital age, by preparing the foundations for a potential digital euro that will complement cash and not replace it.
Our Eurogroup work programme for the year focuses on these issues, and I’ll speak on that in detail in a few more moments. But before I do that, just a quick update on our discussion today.
The meeting began with an assessment of the latest economic developments confronting the euro area, based on the IMF assessment that we received. We expect subdued activity after the many shocks that hit us over the past couple of years – and that’s what we are clearly seeing in the recent forecasts. But there are some real bright spots too. The labour market remains strong with record-low unemployment. The disinflation process is well underway and the economic sentiment improved overall last month. And while the industrial production and PMI numbers are patchy, what we are seeing is very far from doom and gloom, right across the board. And after a long and very important set of debates, we’re also on the cusp of a new and improved set of fiscal rules.
So I would see the glass as very much half full, and the IMF recognised our strong policy response and resilience in the face of some unique shocks. Based on the engagement that we had today, I am reassured again that there is a broad agreement within the Eurogroup on the central policy conclusions and in particular, regarding what we need to do on budget policy for 2024 and beyond.
So with that said, we then moved on to agree on the recommendations on the economic policy for the euro area for 2024. That will be discussed and agreed in Ecofin tomorrow. These recommendations set out five priority policy areas: (1) coordination of fiscal policies, (2) sustaining high levels of public investment, (3) supporting wage developments that mitigate purchasing power losses, while also taking into account the need to be careful with regard to risks to inflation and competitiveness, (4) strengthening the single market, (5) and the work we need to do to maintain macro-financial stability.
From this, we moved on to the longer-term performance of the euro area under our work stream on the competitiveness of the euro area. To get this discussion continuing to flow, we welcomed Christian Zinglersen of the EU Agency for the Cooperation of Energy Regulators, and Jeromin Zettelmeyer, director of Bruegel, who both gave us their perspectives on the future development of energy markets across the world and in Europe, building on a paper that was developed by the Commission. This reminds us that we’ll continue to see energy prices that are high for some time. We discussed the consequences of this in terms of competitiveness and what this means for economic policy, but also policy across many other areas of the European Union.
We recognise the need to reduce our exposure to global price fluctuations in the energy sector. And we recognise that this can only be done through coordination and through better integration. The main ways in which this can be achieved are the diversification of energy sources, the rolling out of renewable energy production, making progress in decarbonisation, and working on the interconnections in the European electricity markets.
After this, we agreed on the work programme of the Eurogroup until the summer. This included a focus on 4 particular priorities – 4Cs of coordination, capital markets, competitiveness and the future development of our common currency.
We concluded our meeting with a stocktake of the ESM treaty ratification, with an update from Minister Giorgetti following the negative vote that took place in the Parliament of Italy last December. We cannot announce any further progress on this front. The good news is that our banking system continues to be well capitalised, the Single Resolution Fund is, of course, fully built up, mutualised and available if necessary. Nonetheless, the non-ratification of this revised treaty means that our efforts to build a Banking Union continue to lack a common backstop to the Single Resolution Fund and continue to lack a powerful tool to help us deal with the effects of banking difficulty.
This brings me to the end of our agenda on our meeting today, with a good start to the work of the Eurogroup for 2024.