European Fiscal Monitor: July 2024

After a prolonged period of stagnation, the EU economy is expected to rebound in 2024. According to EU projections by national Independent Fiscal Institutions (IFIs), the EU’s real GDP is set to grow by 1.1 % in 2024 on average, compared with 0.4 % in 2023. Also, annual inflation across the EU is projected to continue its downward path. Still, economic risks driven mainly by geopolitical uncertainties surround the macroeconomic environment. The escalation of tensions in the Middle East can disrupt supply chains and increase commodity prices. The ensuing uncertainty has implications for trade and financial markets, and can weigh on investment and growth prospects.

Furthermore, elections in several Member States this year can give rise to policy uncertainty and affect government spending. Similarly, persistently high interest rates and weak economic activity are likely to bring about challenges for public finances. Public finance projections suggest that in several EU Member States, including France and Belgium, general government deficits will go above the Treaty reference value of 3 % of the GDP. What is more, except in a few countries, gross public debt ratios in most EU countries will not see any major improvement.

This European Fiscal Monitor provides an overview of how 32 national IFIs assess the macroeconomic and fiscal outlook in 26 EU Member States and the UK, based on the 2024 update for the Stability and Convergence Programme prepared around May 2024. The Monitor also draws on a survey of IFIs carried out in May 2024. The figures presented in this report are derived from information obtained from the national IFIs.