-
Policy
Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM POLICY: -
EM Policy
EM Policy
Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM EM POLICY: -
G10 Markets
G10 Markets
Real-time insight on key fixed income and fx markets.
Launch MNI PodcastsFixed IncomeFI Markets AnalysisCentral Bank PreviewsFI PiFixed Income Technical AnalysisUS$ Credit Supply PipelineGilt Week AheadGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance CalendarsEZ/UK Bond Auction CalendarEZ/UK T-bill Auction CalendarUS Treasury Auction CalendarPolitical RiskMNI Political Risk AnalysisMNI Political Risk - US Daily BriefMNI Political Risk - The week AheadElection Previews -
Emerging Markets
Emerging Markets
Real-time insight of emerging markets in CEMEA, Asia and LatAm region
-
Commodities
-
Credit
Credit
Real time insight of credit markets
-
Data
-
Global Macro
Global Macro
Actionable insight on monetary policy, balance sheet and inflation with focus on global issuance. Analysis on key political risk impacting the global markets.
Global MacroDM Central Bank PreviewsDM Central Bank ReviewsEM Central Bank PreviewsEM Central Bank ReviewsBalance Sheet AnalysisData AnalysisEurozone DataUK DataUS DataAPAC DataInflation InsightEmployment InsightGlobal IssuanceEurozoneUKUSDeep DiveGlobal Issuance Calendars EZ/UK Bond Auction Calendar EZ/UK T-bill Auction Calendar US Treasury Auction Calendar Global Macro Weekly -
About Us
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Real-time Actionable Insight
Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.
Free AccessMNI China Daily Summary: Wednesday, December 11
MNI POLICY: EU Agree Tighter '24 Fiscal Stance, Debating Scale
Euro Area finance chiefs agree the bloc’s fiscal stance for 2024 should be significantly more restrictive than 2023 following years of covid and energy cost support measures, but there is less accord among member states on what that should mean in terms of quantitative consolidation, MNI understands.
Agreement on the broad approach was reached at a meeting of Euro Area finance officials in Brussels on July 3 and 4 as they prepared the agenda of the July 13 Eurogroup meeting, where the wider policy mix will be the key topic, all against the backdrop of the ECB's ongoing battle against inflation.
Eurogroup President Paschal Donohoe is set to issue a statement on the overall Euro Area fiscal stance following the mid-July meeting, calling on states to wind down the energy-related measures they adopted to address the spike in gas prices which followed Russia’s invasion of Ukraine last year.
As a result of these nuances on the required scale of tightening if not on the direction of fiscal policy, one frugal source said he expected next week’s statement -- which will not go into the detailed numbers -- to be tempered but still “somewhat hawkish”.
NOT THERE YET
But there remains no agreement among member states on what more restrictive should mean in quantitative terms.
In its annual Country Specific Recommendations for economic policy issued in May, the EU Commission called for a 0.5% of GDP reduction in structural deficits next year when EU fiscal rules will be back in force. They were suspended in 2020 because of the economic impact of the Covid pandemic.
But while some states -- including Germany, the Netherlands and others in the ‘frugals’ grouping -- saw this as a minimum effort at the meeting, southern and higher-debt countries regard 0.5% as more of a target.
In its last set of forecasts, the Commission projected that the Euro Area would see a restrictive fiscal stance of 0.8% next year while noting that the net effect of eliminating all energy-related support measures would be 1.25%. It called for states to eliminate all such policies and devote the proceeds to deficit reduction, although it advised that consolidation efforts should be no more than 1.25%.
Overall, the Eurozone fiscal stance is expected to be significantly more restrictive in 2024 than this year, with Germany and the frugal grouping of countries likely to try and go beyond what they say should be a minimum consolidation of 0.8% of GDP.
According to Eurostat, the euro area budget deficit for 2022 stood at 3.6%, ranging from -8.0% in Italy, to a surplus of 3.3% in Denmark. The Commission's forecast pointed to deficit improving modestly to 3.2% in 2023 then 2.4% in 2024.
INFLATION FIGHT
While higher-debt states are at least committing themselves to aim for that level of consolidation, it looks likely that they may fall short of winding down all of the extra spending they allocated to energy-related measures in 2022.
In June, the ECB again called for a prompt roll back of energy-related support measures in a concerted manner to avoid driving up medium-term inflationary pressures which would call for a stronger monetary policy response, whilst noting that fiscal policies should be designed to make the "economy more productive and gradually bring down high public debt".
The EU Fiscal Board has advised that 0.8% may not be enough in light of an expected return to more normal economic conditions next year, longer-term fiscal challenges and the need to support the ECB’s efforts to bring down inflation.
To read the full story
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.