The European Commission has placed Portugal on a list of 17 countries that must undergo an “in-depth analysis”, to verify whether they are “affected by [macroeconómicos]” that require “political measures”.
The conclusion is contained in the Alert Mechanism Report, which starts from the evaluation of the budget projects submitted to Brussels in October. This report works as a “screening”, which aims to “detect risks of potential macroeconomic imbalances”.
In addition to Portugal, “Cyprus, France, Germany, Greece, Italy, the Netherlands, (…) Romania, Spain and Sweden” are also included, which were “subject to an in-depth analysis in the previous annual cycle of supervision of the Macroeconomic Imbalances”, The document also includes “the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Luxembourg and Slovakia”.
The Commission released this Tuesday the assessment of the draft budget plans of the Member States, for 2023, in which it intends to verify whether the budgets of each of the countries meet the recommendations of Brussels.
This year’s assessment “takes into account” that the general escape clause of the Stability and Growth Pact continues to be applied in 2023, says the European Commission.
In the analysis presented, the European Commission considers the budget recommendations for 2023, approved by the Council. It is generally recommended that countries with “low and medium debt” should ensure balanced government expenditure “in line with a globally neutral policy orientation”.
The “heavily indebted” Member States, on the other hand, must “ensure a prudent budgetary policy, in particular by limiting the growth of primary current expenditure financed at national level”. These should remain “below potential output growth in the medium term”.
These recommendations were carried out individually for each of the euro area Member States, with “personalised advice for the period 2023-2024”.
The Commission invites Belgium, Portugal, Austria, Lithuania, Germany, Estonia, Luxembourg, the Netherlands, Slovenia and Slovakia to take the necessary steps within the framework of the national budgetary procedure to ensure that their 2023 budgets are fully in line with the recommendations of the Council”.
Brussels advocates that Member States continue to “coordinate budgetary policies to support the timely return of inflation to the medium-term objective of the European Central Bank of 2%”.
“Sustaining a high level of public investment to promote social and economic resilience and support green and digital transitions”, is also included among the recommendations for each of the States.
Governments must also “ensure that the support provided to households and companies facing financial difficulties due to the energy crisis is cost-effective, temporary and targeted at the most vulnerable, in particular SMEs”.
In the recommendations, Brussels “suggests the creation of a dual energy price system that ensures incentives for energy saving, replacing broad-based price measures”, arguing that “in this system, vulnerable consumers could benefit from regulated prices”.
In terms of wages, the European Commission advocates “promoting the evolution” of wages, with a view to “protecting the purchasing power of wage earners”. However, this evolution must “limit” to the simultaneous, the “effects (…) on inflation”.
The package of recommendations also points to the need to “develop and adapt the social support system as necessary”, as well as “improve active labor market policies and address the skills shortage”.
“Ensure the effective involvement of social partners in policy-making and strengthen dialogue”, is also among the recommendations, in which Brussels defends “even more improvements” in the business environment, as well as the preservation of “macro-financial stability”.