Eurogroup advocates for slight fiscal contraction for 2025

BRUSSELS - Eurozone finance ministers agreed Monday that a slight fiscal contraction in 2025 is "appropriate", given the current macroeconomic outlook, the need to continue to enhance fiscal sustainability and to support the ongoing disinflationary process.

In a joint statement issued at the end of the Eurogroup meeting in Brussels, the ministers also said that policies should "remain agile in view of the prevailing uncertainty".

"We will continue to pursue ambitious structural reforms and preserve and where appropriate increase the level of investment, including in areas of common priority, such as the green and digital transitions, as well as defence capabilities, financed through national and EU sources, including the Recovery and Resilience Facility," the ministers said.

They also pledged to "improve the effectiveness, quality and composition of public spending".

In addition, they vowed to phase out the remaining energy support measures that were introduced in 2022 and 2023 to counter the increase in energy prices while using the related savings to cut budget deficits.

On the outlook, the ministers said that while the economy entered 2024 on a weak footing, conditions for an acceleration of economic activity in the euro area in 2025 "appear to be in place".

At a press conference at the end of the meeting, Eurogroup President Paschal Donohoe said agreement was reached to accelerate the implementation of the Capital Market Union.

"I am pleased to confirm that we have agreed on an ambitious Eurogroup statement to outline our common priorities for the future development of the Capital Market Union in the years to come," he said.