Brussels expects to receive austere budgets from each country for 2024 in one month

2023-09-15 16:14:43

With different timbres of voice, but with the same intention. The president of the Eurogroup, Pascal Donohoe, the European Commissioner for the Economy, Paolo Gentiloni, and the president of the ECB, Christine Lagarde, This Friday they reminded the member states of the euro zone to prepare austere and restrictive budgets for 2024, before submitting their respective proposals to the examination of the European Commission within a month, before the October 15th.

The accounts for 2024 must be “cautious, restrictive and in line with the changes that are being made in monetary policy” to contain inflation, said the president of the Eurogroup, Pascal Donohoe, in Santiago de Compostela, at the press conference after the informal meeting of finance ministers that the Spanish Presidency of the EU has convened in the Galician capital.

Despite the difficulties in forming a government and the uncertain process of investiture of a president by the Congress of Deputies in the coming weeks, Spain (with a government in office or not) will also have to present a plan in Brussels before October 15. budget that, with all certainty, will include an extension of the current State accounts. The European Commission will monitor whether this plan complies with the austerity guidelines launched from Brussels.

Fiscal policy

One day after the tenth rate increase undertaken by the European Central Bank In the last 14 months, the commissioner Gentlemen explained that “to support the ECB’s efforts to contain inflation, “fiscal policy must be restrictive” and contribute to reducing the debt and deficit public. “It does not mean less investment, but it does mean less energy aid and focusing measures on the most vulnerable groups,” stressed the Italian commissioner, in a new appeal to the member states to dismantle without delay the stimuli that the governments to compensate for the effects of the pandemic, first, and those of the energy crisis, after.

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Gentiloni has praised Spain’s drive to reach a “good agreement” on new fiscal rules before the end of the year. Although no new text has been presented in Santiago de Compostela, Nor is it expected that any decision will be adopted in this regard this Saturday, at the informal meeting of Ecofin, Gentiloni has hoped to achieve “some progress” that will allow further progress to be made.

The acting vice president Nadia Calviño has expressed her intention to move forward “an ambitious schedule” with the aim of having an agreement before the end of the year, under the Spanish Presidency of the EU, to have as soon as possible a new framework of fiscal rules with “stable and gradual paths” of public debt reduction that, at the same time, allow advance investments in the European agenda green and digital.

The Spanish Presidency intends to present a first proposal for an agreement at the next formal meeting of the Finance Ministers, which will take place in Luxembourg on October 17.

Interest rates

“Budget policy must be slightly restrictive and reduce debt and deficit. What Europe needs is more public and private investments in the green and digital transition,” added ECB President Christine Lagarde.

Lagarde has had the opportunity to defend before the euro finance ministers the new increase in interest rates decided the previous day by the ECB. “I think it was understood very well. There was no no question or question of our decision,” said the president of the ECB at the press conference after the Eurogroup meeting.

Lagarde has once again explained that after placing the official price of money At 4.5%, “interest rates have reached levels that, maintained for a sufficient period of time, should contribute to returning inflation to the 2% objective.” Now, that is “today’s vision.” If inflation data worsens, the ECB will recalibrate what the appropriate level of interest rates is and for how long. For this reason, Lagarde refuses to answer the question of whether interest rates have already reached the top. “What I can assure you is that we are going to tame inflation,” he said.