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Macroeconomic situation and policy challenges
The Eurogroup exchanged views on the economic situation of the euro area and discussed the main policy challenges on the basis of the European Commission forecast. The Commission published its spring forecast on 7 May.
Regular discussions on the economic situation and policy challenges underpin the Eurogroup's efforts to bolster economic growth and job creation.
Budgetary instrument for convergence and competitiveness
Following the mandate received by EU leaders at the 14 December Euro Summit, the Eurogroup in inclusive format continued discussing the deepening of the Economic and Monetary Union (EMU).
Ministers discussed revenue aspects and looked into an overview of all the features of the budgetary instrument for convergence and competitiveness for the euro area and Exchange Rate Mechanism (ERM) II member states on a voluntary basis. The Eurogroup is expected to prepare an agreement in June.
Remarks by Mário Centeno following the Eurogroup meeting of 16 May 2019
[...]The euro area economy has been growing for a record-breaking 24 consecutive quarters, since the second quarter of 2013. The number of people in employment has increased by 10.8 million compared to six years ago, which is quite remarkable. Unemployment has fallen steadily, although the benefits of this virtuous growth trend have not yet reached all citizens and this is worth reflecting.
Looking ahead, we expect growth and job creation to continue this year, albeit at a modest pace. Despite a slowdown at the end of 2018, first quarter data for this year already shows a pick up in the growth pace of major economies.
There are important risks to this outlook and they are to a large extent external and of a political nature. Trade tensions and Brexit uncertainty are probably the most prominent ones.
We are convinced the euro area is today more resilient and better equipped with tools to handle shocks. Moreover, we are also committed to delivering on the mandate from Leaders to make progress on deepening the economic and monetary union. The progress we make here will also boost confidence in the euro and the euro area.
All in all, it was a good discussion and we will continue to review the situation very closely as new data comes to the fore.
In the context of national policy measures, Greece informed us about their recently announced and legislated measures, which are relevant for the agreed fiscal path. We aim to discuss this in June on the basis of the third enhanced surveillance report by the Commission. Greece has overachieved on fiscal targets so far, we expect the commitment with the Eurogroup to continue to be respected so that Greece continues to enjoy investors' confidence in the future.
Later on, we considered the further progress on the features of the budgetary instrument for competitiveness and convergence.
Over the past months, we have divided our discussions on the euro area budgetary instrument into three blocks. In recent meetings, we already discussed where to spend the money and the decision making process on the instrument. Today we discussed how to finance it.
The key issue is whether to rely on own resources only or also on so-called “assigned revenues” – with contributions from member states from outside the EU budget. This has important legal and governance implications.
As agreed by leaders, euro area members will provide strategic guidance and criteria. There is broad support to codify this role, but we still need to converge on the appropriate form.
Euro area member states would be involved in the monitoring of the implementation of the instrument by the European Commission.
Building on that discussion, we took stock of all features of the instrument which we have already discussed. Since February, we have made good progress on several key features and options in terms of expenditure, governance, revenues and also the legal codification. A few critical elements are still open but I am confident we will find common ground in June.
Finally, let me recall that in June we aim to deliver not only on the budget instrument but also on the mandate regarding the ESM Treaty change and EDIS and the banking union. It will be another long meeting but I’m sure it will be worth it.