The European Commission has placed Portugal on a list of 17 countries that must undergo an “in-depth analysis” to check if they are “affected by [macroeconómicos]that require “political measures”.
The conclusion is contained in the Alert Mechanism Report, which is based on the evaluation of the budget projects presented to Brussels in October. This report functions as a “screening”, whose objective is to “detect risks of possible macroeconomic imbalances”.
In addition to Portugal, “Cyprus, France, Germany, Greece, Italy, the Netherlands, (…) Romania, Spain and Sweden” are also included, which were “subject to in-depth analysis in the previous annual monitoring cycle of macroeconomic imbalances”, the document also includes “the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Luxembourg and Slovakia”.
The Commission has made public this Tuesday the assessment of the draft budget plans of the Member States, for 2023, in which it intends to verify if the budgets of each of the countries comply with the Brussels recommendations.
This year’s assessment “takes into account” that the general escape clause of the Stability and Growth Pact continues to apply in 2023, says the European Commission.
In the analysis presented, the European Commission considers the budgetary recommendations for 2023, approved by the Council. In general, it is recommended that countries with “low and medium debt” ensure balanced public spending “in line with a globally neutral policy orientation.”
“Highly indebted” member states, on the other hand, must “ensure prudent budgetary policy, in particular by limiting the growth of domestically financed primary current expenditure.” These should remain “below potential output growth in the medium term.”
These recommendations were made individually for each of the Member States of the euro area, with “personalized advice for the period 2023-2024”.
The Commission invites Belgium, Portugal, Austria, Lithuania, Germany, Estonia, Luxembourg, the Netherlands, Slovenia and Slovakia to take the necessary steps under the national budgetary procedure to ensure that their 2023 budgets are fully in line with the recommendations of the City Hall”.
Brussels advocates that member states continue “coordinating budgetary policies to support the timely return of inflation to the medium-term objective of the European Central Bank of 2%.”
“Maintain a high level of public investment to promote social and economic resilience and support green and digital transitions” is also included among the recommendations for each of the States.
Energy
Governments must also “ensure that the support provided to households and businesses facing financial difficulties due to the energy crisis is cost-effective, temporary and targets the most vulnerable, particularly SMEs.”
In the recommendations, Brussels “suggests the creation of a dual energy pricing system that ensures incentives for energy savings, replacing broad-based pricing measures,” arguing that “in this system, vulnerable consumers could benefit from regulated prices”.
In terms of wages, the European Commission advocates “promoting the evolution” of wages, with a view to “protecting the purchasing power of wage earners.” However, this evolution must “limit” to the simultaneous, the “effects (…) on inflation”.
The package of recommendations also points to the need to “develop and adapt the social support system as needed” as well as “improve active labor market policies and address skills shortages.”
“Guarantee the effective participation of the social partners in policy-making and strengthen dialogue” is also among the recommendations, in which Brussels defends “further improvements” in the business environment, as well as the preservation of “macrofinancial stability “.
Source: TSF
