Economic and Financial Affairs

Remember to register for the upcoming Annual Research Conference, taking place on 15 November 2021

The Communication issued on 19 October follows President von der Leyen's commitment in her State of the Union address to build a consensus on the future of the EU's economic governance framework. The Commission had previously suspended this public debate, which was first launched in February 2020, to focus on responding to the economic and social impact of the COVID-19 pandemic. The relaunched debate will draw on both the Commission's view of the effectiveness of the economic surveillance framework presented in February 2020 and the lessons learnt from the COVID-19 crisis described in the Communication. The Commission invites all key stakeholders to engage in this public debate in order to build consensus on the future of the economic governance framework. It is crucial to have in place a framework that can fully support Member States to repair the economic and social impact of the COVID-19 pandemic and respond to the EU's most pressing challenges.

Regarding the COVID-19 situation, they agreed on the need to increase vaccination rates by stepping up efforts to overcome vaccine hesitancy, including by tackling disinformation. The European Council also called for further coordination to facilitate free movement within, and travel into, the EU. Leaders also agreed that the EU’s resilience to and horizontal preparedness for crises must be strengthened; obstacles hampering the global roll-out of vaccines must be removed; and on a strong, central role of the World Health Organization in future global health governance and in concluding an international treaty on pandemics. The European Council also addressed the recent spike in energy prices and considered the impact of the price rises on citizens and businesses—especially vulnerable citizens and SMEs—striving to recover from the COVID-19 pandemic. Leaders also held a strategic discussion on EU trade policy. They discussed preparations for the upcoming ASEM Summit, the Eastern Partnership Summit, and COP26, and took note of preparations for the meeting of COP15 on biological diversity in Kunming.

This is the second and final tranche under Ukraine's current MFA programme following the first €600 million disbursement in December 2020. With this disbursement, the outstanding amount of loans to Ukraine under its multiple MFA programmes reaches €4.4 billion. This disbursement is part of the €3 billion emergency MFA package for ten enlargement and neighbourhood partners, which aims to help them limit the economic fallout of the COVID-19 pandemic. The programme is a concrete demonstration of the EU's solidarity with its partners in helping them to respond to the economic impact of the COVID-19 pandemic. The disbursement is based on the Commission's positive assessment of the Ukrainian authorities' progress in implementing all eight policy commitments relating to public finance management, governance and rule of law, improving the business climate, and sectoral reforms and state-owned enterprises. With this disbursement, the EU has completed seven out of the 10 MFA programmes in the €3 billion COVID-19 MFA package and disbursed the first tranches to all partners.

A year earlier, the rate was -0.3%. EU annual inflation was 3.6% in September 2021, up from 3.2% in August. A year earlier, the rate was 0.3%. These figures are published by Eurostat, the EU statistical office. The lowest annual rates were registered in Malta (0.7%), Portugal (1.3%) and Greece (1.9%). The highest annual rates were recorded in Estonia, Lithuania (both 6.4%) and Poland (5.6%). Compared with August, annual inflation fell in one Member State, remained stable in one and rose in twenty-five. In September, the highest contribution to the annual euro area inflation rate came from energy (+1.63 percentage points, pp), followed by services (+0.72 pp), non-energy industrial goods (+0.57 pp) and food, alcohol & tobacco (+0.44 pp).

Decreases in the deficit compared to the first quarter of 2021 were observed, but the deficit remains at a high level. The deficit to GDP ratio decreased mainly due to a higher GDP, while both expenditure and revenue increased in absolute terms in comparison with the first quarter of 2021. Total revenue and total expenditure continued to be influenced by policy responses to the COVID-19 pandemic. In the second quarter of 2021, most Member States continued to record a government deficit. In the second quarter of 2021, total government revenue in the euro area amounted to 46.2% of GDP, a decrease compared with 46.7% in the first quarter of 2021. Seasonally adjusted total revenue in the euro area increased by around €17 billion compared with the first quarter of 2021. Total government expenditure in the euro area stood at 53.1% of GDP, a decrease in the ratio compared with 53.8% in the previous quarter. Seasonally adjusted total government expenditure increased by around €15 billion compared with the first quarter of 2021. In the EU, total government revenue was 46.0% of GDP in the second quarter of 2021, a decrease compared with 46.4% in the first quarter of 2021. Total government expenditure in the EU was 52.3% of GDP, a decrease compared with 52.9% of GDP in the previous quarter.