Brussels, 12 March 2024
“Check against delivery”
Good afternoon.
As Paschal said, we had a first discussion this afternoon on the fiscal stance for the euro area in 2025. You have seen the statement that has been published. Of course, this is connected to the new fiscal rules, which are waiting for final approval by the Parliament next month.
Because under the revised economic governance framework, Member States with debt above 60% or deficit above 3% of GDP will deliver risk-based and differentiated fiscal adjustments. A preliminary estimation of those adjustment needs at euro area level, based on our Autumn Forecast and based on the updated costs of ageing from the forthcoming 2024 Ageing Report, these needs result in a slightly contractionary fiscal stance in 2025 for the euro area.
As I underlined in our meeting today, while such a stance is consistent with the euro area recommendation for 2024-2025 that we discussed in January, policies should remain agile in view of the fact that we are facing declining in inflation, very weak growth and overall prevailing macroeconomic uncertainty, with the protracted geopolitical tensions tilting the balance of risks towards more adverse outcomes.
Equally important, the much-needed fiscal adjustment should not lead to investment cuts. This is a really difficult balance to find. We must not repeat the mistakes of a decade ago. In this context, it is key to note that financing from the RRF will continue to support investment and other growth-enhancing spending. Expenditure financed by RRF grants and other EU funds is set to provide fiscal support by around half a percentage point of GDP at the euro area level in 2024 and 2025. But this must complement and not substitute nationally financed investment.
Of course, our main topic today was, as the President of Eurogroup said, on the Capital Markets Union. And let me thank Paschal for his efforts in driving this issue forward over several months and on reaching this result today, which is an achievement. We know that completion of the CMU remains a long-term project, but urgent and decisive action is needed now to make real progress, starting with the finalisation of the proposals that are still under discussion.
This effort should go hand in hand with policies that remove barriers within the Single Market, support the modernisation of our economies, and strengthen Europe’s competitiveness. To achieve that and boost the EU’s attractiveness as an investment-friendly jurisdiction, we need to put our collective interest first.
We are finalising this exercise at a time when European security and prosperity are fundamentally challenged, from all sides. And we are discussing this every time. And I am not only thinking of the obvious geopolitical challenges.
New competitive fintech centres and innovative capital market ecosystems are emerging very fast in places like India and Brazil. The world is not waiting for us, and our companies will not wait for us either.
In the Commission, we have started our own reflections on how to take CMU forward. Of course, I cannot speak for the next Commission, but my expectation is clearly that capital markets policy will again be a key priority. And the message of the statement that was reached today is exactly in this direction. It is not as an aim in itself, it is a crucial ingredient to support the EU’s wider strategic interests and to help finance our many essential objectives. So let me conclude by congratulating Paschal on today’s agreement on this statement which is an important common platform for the process of completing Capital Markets Union.