An Assessment of the Euro Area Fiscal Stance

This Economic Brief analyses the euro area fiscal stance since 2020, i.e. the impulse that national budgets and the EU budget have been providing to the euro area economy since the pandemic.

Highlights

• The fiscal stance is measured by Commission services as the net expenditure developments relative to medium-term potential output growth.
• Based on the latest forecast, the euro area fiscal stance was highly supportive in 2020-2023, during the Covid-19 and the energy crises but it is forecast to turn contractionary in 2024 and, under unchanged policies, neutral in 2025.
• The euro area fiscal stance would be slightly contractionary in 2025, ranging from around ¼ % to around ½ % of GDP, assuming that Member States will follow a fiscal adjustment corresponding to the need to keep their public debt sustainable, as defined in the context of the new EU fiscal framework

Information and identifiers

Economic Brief 080. July 2024. Brussels. PDF 20 pp. Tab. Graph. Bibliogr. Free.

KC-BE-24-002-EN-N (online) 
ISBN 978-92-68-12536-6 (online) 
ISSN 2443-8030 (online)
doi:10.2765/555052 (online)

JEL classification: E61, E62, H50.

Disclaimer

European Economy Economic Briefs are written by the staff of the European Commission’s Directorate-General for Economic and Financial Affairs to inform discussion on economic policy and to stimulate debate. The views expressed in this document are solely those of the author(s) and do not necessarily represent the official views of the European Commission.