The European Commission has found Malta’s Budget 2019 to have been in line with the of euro area’s Stability and Growth Pact.
Unveiling the European Semester Autumn Package yesterday, the Commission noted that Malta was one of 10 member states to have passed the fiscal test, the others being Germany, Ireland, Greece, Cyprus, Lithuania, Luxembourg, Netherlands, Austria, and Finland.
The draft budgetary plans for three member states – Estonia, Latvia and Slovakia – were found to have been broadly compliant. For these countries, the plans might result in some deviation from the country's medium-term budgetary objective (MTO) or the adjustment path towards it.
For four Member States – Belgium, France, Portugal and Slovenia – the Commission found that the DBPs pose a risk of non-compliance with the Stability and Growth Pact in 2019. The DBPs of these Member States might result in a significant deviation from the adjustment paths towards the respective medium-term budgetary objective.
In the case of Italy, having assessed the revised DBP presented on 13 November, the Commission confirmed the existence of a particularly serious case of non-compliance with the Recommendation addressed to Italy by the Council on 13 July 2018. The Commission had already adopted an Opinion on 23 October 2018 identifying a particularly serious non-compliance in the initial DBP presented by Italy on 16 October 2018.
Bolstering inclusive and sustainable growth
More broadly speaking the 2019 European Semester cycle of economic and social policy coordination begins against a backdrop of sustained but less dynamic growth in a climate of high uncertainty.
The Commission notes that a lot has been achieved since 2014 but more must be done to support inclusive and sustainable growth and job creation while enhancing the resilience of Member States' economies. At EU level, this demands taking the decisions required to further strengthen the Economic and Monetary Union. At national level, there is a pressing need to use the current growth momentum to build up fiscal buffers and reduce debt. Investment and structural reforms need to focus even more on boosting productivity and growth potential. These actions will provide the conditions for sustained macro-financial stability and serve EU's long-term competitiveness. This will, in turn, create the conditions for more and better jobs, greater social fairness and better living standards for Europeans.
Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union said, "Europe is in good economic times, but rising risks indicate that this will not last forever. EU countries need well-targeted investments and renewed reform efforts to strengthen their growth fundamentals and increase productivity. On the budgetary policy side, it is time to reduce public debt levels and rebuild fiscal buffers. This will give us the room for manoeuver we'll need when the next downturn comes. Now is also the time to make progress on deepening Europe's Economic and Monetary Union."
Marianne Thyssen, Commissioner for Employment, Social Affairs, Skills and Labour Mobility, said: “The economic recovery of recent years has been particularly job-intensive and unemployment is reaching record lows. At the same time, more and more people are participating in the labour market. The activity rate has reached a record high and has even surpassed that of the USA. The conditions are now in place for us to invest more in our societies, in our people, so that this recovery becomes permanent and benefits everyone, including the generations to come.”
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs said, “The EU economy continues to grow at a healthy clip. Today's policy advice from the Commission is about ensuring it stays strong and becomes more resilient – because in an increasingly uncertain global context, we cannot take anything for granted. A sustainably prosperous euro area needs not only sound public finances but also competitive economies and inclusive societies.”
Last year's exceptionally favourable global economic situation and low interest rate environment helped to support growth, employment, debt reduction and investment in the EU and euro area.
All Member States are forecast to continue growing, though at a slower pace, thanks to the strength of domestic consumption and investment. Barring major shocks, Europe should be able to sustain above-potential economic growth, robust job creation and falling unemployment.
The public finances of euro area Member States have improved considerably and the aggregate euro area public deficit is now below 1%. However debt remains high in several countries.
As the economy continues to grow, it is time to build up the fiscal buffers needed to cope with the next downturn and mitigate potential employment and social impacts.