At Thursday’s working lunch at the informal Ecofin meeting in Göteborg, EU finance ministers had a constructive discussion on fiscal exit strategies and public finances.

Necessary to design exit strategies now, even if implementation will have to wait

Ministers observed that the EU has responded to the economic and financial crisis with bold and decisive action, including unprecedented fiscal and monetary policies and comprehensive measures to tackle distress in the financial sector. They noted that these policies have contributed strongly to halting the free fall of the economy and regaining stability, and while there are signs of a tentative recovery sustained by expansionary policies, it is too early to withdraw the stimulus measures. Ministers emphasised that the extraordinary support should remain in place until recovery is secured.

“In order to anchor expectations and reinforce confidence, it is necessary to start designing and communicating credible exit strategies, even if implementation will have to wait,” commented Swedish Minister for Finance Anders Borg. “Today we had a first discussion on how such credible exit strategies could be designed.”

Comprehensive strategies within the framework of the Stability and Growth Pact

Ministers underlined that fiscal exit strategies should be designed and implemented within the framework of the Stability and Growth Pact.

There was agreement that strategies should be comprehensive and encompass the following elements: 1) a timely withdrawal of the extraordinary measures; 2) further structural fiscal consolidation of more than 0.5 per cent of GDP per year; 3) comprehensive structural reforms aiming at strengthening structural employment and potential growth, including labour market reforms and long term investments; and 4) strengthened national budgetary frameworks. 

It was also noted that stability and convergence programmes will be instrumental in developing and implementing the strategy at Member State level.

“Further work will be carried out under the Swedish Presidency in order to further detail the strategy and ensure a consistent set of recommendations to countries subject to the Excessive Deficit Procedure,” concluded Anders Borg.