MNI BRIEF: EZ '24 Fiscal Contraction Still Appropriate-Eurogroup

A further contraction in Euro Area fiscal policy next year is still appropriate, eurozone finance ministers said in a statement Thursday.

While the ministers noted the recent ruling by the German Constitutional Court could have an impact on the bloc’s aggregate fiscal stance next year, the ministers said it was important that policy remained “agile” and noted that increased investment would underpin growth.

Before the recent ruling, the EU Commission had said it expected euro zone fiscal policy would have a contractionary effect of 0.6% of GDP next year following 0.5% this year. The GCC ruling is expected to amplify that effect, although by how much is not yet clear.