European Commission fiscal policy guidance for 2023 towards Member States: A cautious balance

The Euroepan Commission recommends in its Fiscal Policy Guidance for 2023 in particular that:

• starting a gradual fiscal adjustment to reduce high public debt as of 2023 is advisable, while a too abrupt consolidation could negatively impact growth and, thereby, debt sustainability.
• nationally financed high quality public investment should be promoted and protected in medium-term fiscal plans since promoting a resilient economy and tackling the challenges of the twin transition are common key policy objectives for 2023 and beyond.

CESI Secretary General Klaus Heeger said: “The lesson of the post-2007 financial and public debt crisis has been that excessive and abrupt austerity responses have disastrous adverse social effects for many citizens and workers and do no good the economy at large. We welcome that the response of the EU and the Member States to the Covid crisis has been more investment-focused. The quick economic recovery following the Covid lockdowns shows that this was the right path. Clearly, debt levels are high in many Member States and it is important to have a plan on how to manage them in a sustainable manner. However investments must continue, too,especially in public services. In its fiscal policy guidance for next year for the Member States, the European Commission seems to strike a good balance between both.”