Remarks by Commissioner Gentiloni at the Eurogroup press conference

(Source: European Commission)

Good afternoon. I outlined to ministers this afternoon the main messages to the euro area emerging from our Spring European Semester package adopted earlier today, which in turn is built on our Spring Forecast, showing that the war changed the course of our economy: not only inflicting human and territorial devastation to Ukraine, but also changing the picture of our economy with a sharp decrease of our growth and with higher inflation.

Moreover, as you know, this outlook is subject to downside risks, that we translated into adverse scenarios in our forecast and high uncertainty. In other words, our economy is still far from normality. And this is why we concluded in favour of extending the general escape clause of the Stability and Growth Pact through 2023.

This extension will provide the space for national fiscal policies to react quickly to evolving circumstances in highly unpredictable times. As I stressed this morning, we are not proposing a fiscal free-for-all. National fiscal policies should combine higher investment with controlling the growth in current expenditure, especially in high-debt countries, which should ensure a prudent fiscal policy in 2023, within the framework that Paschal has just mentioned.

This means that Member States should continue to transition from the universal support provided during the pandemic to more targeted measures to mitigate the impact of the energy crisis and to assist those fleeing the war.

A few words on the Draft Budgetary Plans of Germany and Portugal. In line with the Council recommendation, both plans envisage a supportive fiscal stance this year and intend to preserve nationally financed investment. We also found that Portugal plans to broadly limit the growth of its nationally financed current expenditure this year. As recommended by the Council, both Germany and Portugal plan to preserve nationally financed investment in 2022.

In its guidance, the Commission recalls the importance of the composition of public finances and the quality of budgetary measures, including through growth-enhancing investment, notably supporting the green and digital transition.

The measures underpinning Germany’s updated Draft Budgetary Plan fulfil these objectives, such as the increased spending by the Energy and Climate Fund.

In Portugal, decisive progress in strengthening expenditure control, cost-efficiency, and appropriate budgeting remains important to facilitate the rechannelling of public resources towards the green and digital transition. Several important measures in this area are included in the Portuguese Recovery and Resilience Plan.

Lastly, on the banking union, not much to add to what Paschal has just said. The Commission strongly supports these negotiations and stands ready to do its part to contribute to reach an agreement, and to adopt the necessary legislative proposals once an agreement is reached. And let me thank Paschal once again for his tireless efforts on this topic.

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