European Fiscal Monitor: February 2024

The macroeconomic landscape of the EU’s economy in 2023 was characterised by a mixture of both positive and challenging trends. While the labour market remained resilient and energy prices receded from their peaks, persistently high inflation and ongoing geopolitical risks undermined the economic outlook. Also, rapid increases in central bank policy rates, after a prolonged period of historically low interest rates, dragged growth down. On the fiscal front, rising interest expenditures burdened the euro area countries, particularly those with higher levels of public debt. 

According to EU national independent fiscal institutions’ (IFIs) projections, the EU’s real GDP growth is expected to gain some momentum in 2024 while inflation is set to decrease further. The recovery however will be moderate and highly uncertain. Growth in 2024 is forecast to be 1.4 % on average, compared to 0.6 % in 2023, according to IFIs and governments estimates. Also, public finance projections suggest that in most EU Member States general government deficits will fall below the 3 % of the GDP Treaty reference value. Gross public debt ratios, however, will not see any major improvement compared to the previous year. 

This EFM provides an overview of the assessment of 32 national IFIs regarding the situation of public finances in 2023, and the fiscal outlook for 2024 in 26 EU Member States and the United Kingdom on the basis of Budgetary Plans that were prepared around October 2023, and in the case of the euro area countries, presented to the Commission. The monitor is based on a survey of IFIs carried out in the period from October to November 2023. The figures presented in this report are based on information obtained from the national IFI and by the national government.

As defined by the European Commission, national IFIs are independently mandated by supranational and national fiscal frameworks to: i) monitor compliance with national and EU fiscal rules; ii) produce or endorse macroeconomic, and in several cases, budgetary forecasts; and/or iii) advise national governments on fiscal policies. This puts them in a good position to assess public finances at national level.