Eurogroup: Challenges ahead of the Eurozone – Slightly restrictive monetary policy in 2025

Challenges and risks identify it in the EU economy’s prospects, as it says in a document that followed the Finance Ministers meeting on Monday (1.1.2024) while stressing the need for a slightly restrictive monetary policy for 2025. The Eurogroup, although generally in agreement with the Commission’s winter forecasts on the labour market and inflation in the Eurozone, points out that economic prospects are leaning downwards, as global uncertainty is burdening them. The Eurozone faces multiple budgetary requirements alongside the need to continue to rebuild financial security reserves. The new framework of the financial rules agreed in February is stressed that it is designed to strengthen debt sustainability and promote sustainable and inclusive growth through structural reforms and investment, while encouraging national ownership and strengthening enforcement of legislation. However, it is noted that on the basis of the most recent data available, the requirements of the revised economic governance framework will be translated into a comprehensive slightly restrictive fiscal stance in the Eurozone in 2025. It should be noted that this would be appropriate in the light of the current macroeconomic prospects, the need to continue strengthening fiscal sustainability and to support the ongoing deflationary process. The Eurosystem’s SUBICs state that they will continue to pursue ambitious structural reforms and maintain and, where necessary, increase the level of investment, including the areas of common priority, such as green and digital transition, as well as defence capabilities, financed from national and Community resources, including the Recovery and Durability Fund. At the same time, the Ministry of Finance commits itself to strengthening efforts to improve the effectiveness, quality and composition of public expenditure. According to their December statement, the remaining energy support measures will continue to be phased out as soon as possible in 2024 and use the relevant savings to reduce state deficits.