The European Fiscal Board publishes its yearly report on euro area fiscal policy direction

Today, the independent European Fiscal Board (EFB) has published its assessment of the general orientation of fiscal policy in the euro area.

The report concludes that the favourable economic outlook offers a prime opportunity to rebuild fiscal buffers. Especially euro area Member States with a high government debt-to-GDP ratio need to do more than simply accrue the budgetary benefits of the economic expansion. The report notes that this is the time to move towards a somewhat more restrictive orientation of fiscal policy in the euro area.  The EFB also emphasises that the current expansion is a prime opportunity to progress with plans to complete the architecture of Europe’s Economic and Monetary Union.  This includes an upgrade of the EU’s fiscal framework and a capacity for joint stabilisation for the euro area. In this respect, the EFB notes that the European Commission’s recent proposal to establish a European Investment Stabilisation Function is a useful step in the right direction, which could be complemented. The EFB is an independent body mandated to advise on the overall direction of fiscal policy of the euro area and to evaluate how the EU fiscal governance framework is executed. It was formally established end 2015 and began operating shortly after its members were appointed in October 2016. The report and press release will be available online.a