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Graph of the week: Fiscal consolidation in the EU

After several years of intense effort to improve public finances, the fiscal stance in the EU and euro area is expected to be broadly neutral this year and next. For more insights into fiscal policy developments in the euro area, watch out for the European Commission’s authoritative report ‘Public Finances in EMU – 2014’ this Wednesday 17 December.

Analysis of the Draft Budgetary Plans submitted by euro area Member States in October confirms that the fiscal stance of both the EU and the euro area should be broadly neutral this year and next and that the aggregate headline fiscal deficit for the EU is expected to be brought down to 3 % of GDP for the first time since 2008.

Budgetary developments in the EU


Source: DG ECFIN, Autumn economic forecast

Structural deficits are projected to remain broadly unchanged in 2014 and 2015.

Following the sizeable fiscal consolidation measures undertaken by most Member States between 2011 and 2013, the fiscal policy stance is expected to be broadly neutral in 2014. The structural deficit, i.e. the general government deficit corrected for cyclical factors, one-offs and other temporary measures, after having significantly declined in both areas in 2013 (by around 1 pp. of GDP) is set to remain broadly stable in the current year and in 2015.

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