COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN CENTRAL BANK on the 2024 Draft Budgetary Plans: Overall Assessment
Date: 2023-11-21
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU Member State, budget deficit, budget estimate, budgetary equilibrium, draft budget, economic forecasting, economic stabilisation, euro area, public debt, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 21.11.2023  COM(2023) 900 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN CENTRAL BANK on the 2024 Draft Budgetary Plans: Overall Assessment  
 
 
EXECUTIVE SUMMARY 

This  Communication  summarises  the  Commission’s  opinions  on  the  2024  Draft  Budgetary 
Plans submitted by euro area Member States and assesses the overall budgetary situation in the 
euro area, including the aggregate fiscal stance.  

A further decline in the euro area deficit is projected in 2024. The euro area economy has 
shown resilience but has lost momentum and continues to face high uncertainty and risks. On 
the fiscal side, based on the Commission forecast which reflects the information in the Draft 
Budgetary Plans, the euro area deficit would be below 3% of GDP in 2024. The debt-to-GDP 
ratio in the euro area is set to decline marginally in 2024.  

The aggregate fiscal stance is projected to be contractionary in 2024 on the back of an 
almost complete phase out of the remaining energy-related measures. This fiscal stance is 
considered appropriate, while policies should remain agile in view of the high uncertainty. This 
contractionary stance comes after the fiscal stance moved into contractionary territory in 2023 
following three years of substantial crisis-related expansion. The contractionary fiscal stance 
projected  in  the  Commission’s  autumn  forecast  is  consistent  with  the  need  to  improve  the 
sustainability of public debt in some Member States and to enhance the fiscal position over the 
medium term, and will contribute to taming inflation and supporting monetary policy.  

In  2024,  the  fiscal  stance  is  projected  to  be  contractionary  in  most  Member  States.  It 
would,  however,  be  expansionary  in  five.  Most  Member  States  are  phasing  out  energy 
measures, but the projected fiscal stance would be more restrictive in 2024 if Member States 
had  planned  to  use  all  the  savings  from  energy  measures  to  reduce  their  deficits,  as 
recommended by the Council. Instead, many Member States have planned to introduce new 
net  current  expenditure.  If  these  measures  are  set  to  be  permanent  and  not  matched  by 
compensatory  measures,  they  could  weigh  on  the  long-term  adjustment  needs  of  Member 
States.  

to  be  deactivated  at 

Turning to the assessment of the Draft Budgetary Plans, the Commission’s opinions are 
anchored by the fiscal recommendations adopted by the Council. With the general escape 
the  end  of  2023,  quantitative  fiscal  country-specific 
clause 
recommendations  were  made in  July  2023  with  respect  to  the maximum growth  rate of  net 
expenditure,  except  for  Member  States  who  were  projected  to  be  at  their  medium-term 
budgetary objective (MTO) in 2023. Member States were also recommended to (i) wind down 
the energy support measures as soon as possible in 2023 and 2024 and, if not at their MTO, 
use  the  related  savings  to  reduce  the  government  deficit;  (ii)  preserve  nationally-financed 
investment; and (iii) ensure the effective absorption of the Recovery and Resilience Facility 
(RRF) and other EU funds. On that basis: 

•  Cyprus, Estonia, Greece, Spain, Ireland, Lithuania and Slovenia are in line with the 
fiscal recommendations. Of those, Cyprus, Estonia and Ireland are projected to be 
at their MTO in 2024, alongside Portugal, while Lithuania is projected to be close 
to its MTO in 2024. 

•  Austria,  Germany,  Italy,  Luxembourg,  Latvia,  Malta,  Netherlands,  Portugal  and 
Slovakia are not fully in line. Germany, Malta and Portugal are invited to phase out 
their energy measures. Italy, Latvia and the Netherlands are invited to stand ready 

1 

 
 
to take necessary measures. Luxembourg and Slovakia are invited to ensure their 
new plan will be in line with the fiscal recommendation. 

•  Belgium, Finland, France and Croatia risk not being in line. Those Member States 
are projected to increase net expenditure above the recommended maximum and are 
invited to  take necessary measures. Of the four,  in Finland and Croatia, national 
fiscal policy is projected to be expansionary. 

Importantly, the fiscal tightening does not come at the expense of investment, which will 
be increased across the euro area. Investment is expected to expand slightly in 2024, ensuring 
continued  support  for  sustainable  and  inclusive  growth,  and  contributing  to  the  green  and 
digital transitions. The contribution of national and EU financing to overall investment growth 
varies  across  Member  States.  Investment  financed  by  national  budgets  is  projected  to  be 
preserved  (or  have  an  expansionary  contribution)  in  all  Member  States,  in  line  with  the 
Council's recommendations on investment, alongside the support to investment provided by 
RRF grants.  

Headline budget deficits are generally declining in the euro area, but are projected above 
the  Treaty  reference  value  of  3%  of  GDP  in 2023  and  2024  for  a  number  of  Member 
States. Eight Member States are projected to have a deficit above 3% of GDP in both 2023 and 
2024  and  one  additional  Member  State  in  2024  only.  In  spring  2024,  the  Commission  will 
propose to the Council to open deficit-based Excessive Deficit Procedures on the basis of the 
outturn data for 2023, in line with existing legal provisions. Member States should take account 
of this when executing their 2023 budgets and when conducting their fiscal policies in 2024. 

2 

 
 
 
 
INTRODUCTION 

Member  States’  Draft  Budgetary  Plans  are  an  important  part  of  the  coordination  of 
economic policy in the Economic and Monetary Union.1 Euro area Member States submitted 
the plans summarising their draft budgets to the Commission and Eurogroup in October 2023 
before their submission to national parliaments.2 Against the background of the Commission’s 
2023  autumn  forecast,  the  Commission  has  adopted  Opinions  on  whether  the  plans  are 
compliant with the Stability and Growth Pact and Council recommendations. These Opinions 
are  summarised  in  this  Communication.  The  Communication  also  provides  an  overall 
assessment of the budgetary situation and prospects for the euro area as a whole. 

The Commission’s assessment is anchored by the fiscal recommendations adopted by the 
Council on 14 July 2023. With the general escape clause to be deactivated at the end of 2023, 
quantitative fiscal country-specific recommendations were made for the first time since 2019, 
geared towards ensuring medium-term debt sustainability as well as raising potential growth 
in  a  sustainable  manner.3  Concretely,  Member  States  who  were  not  projected  to  be  at  their 
medium-term budgetary objective (MTO) in 2023 were recommended to limit the growth of 
net  nationally  financed  primary  expenditure  to  a  differentiated  amount  that  would  ensure 
prudent  fiscal  policy.  Countries  that  were  projected  to  be  at  the  MTO  in  2023  were 
recommended to maintain a sound fiscal position in 2024, without such a quantitative limit. 
All Member States were recommended to wind down the energy support measures as soon as 
possible  in  2023  and  2024  and,  if  not  projected  to  be  at  the  MTO  in  2023,  use  the  related 
savings  to  reduce  the  government  deficit.  The  Council  also  recommended  that  all  Member 
States should preserve nationally-financed investment and ensure the effective absorption of 
the Recovery and Resilience Facility (RRF) and other EU funds, in particular in light of the 
green and digital transition and resilience objectives. For the period beyond 2024, the Council 
recommended to continue to pursue a medium-term fiscal strategy of gradual and sustainable 
consolidation, combined with investments and reforms conducive to higher sustainable growth. 
The Commission’s assessment will consider whether Member States have complied with the 
recommendations, including the broader goal to promote fiscal sustainability and growth. 

This  Communication  is  structured  into  three  sections.  Section  1  outlines  the  euro  area 
macroeconomic  and  fiscal  outlook  set  out  in  the  Draft  Budgetary  Plans  and  in  the 
Commission’s  2023  autumn  forecast.  Section  2  assesses  the  euro  area  fiscal  stance  and  its 
implications for the fiscal-monetary policy mix. It also looks at the drivers of the fiscal stance, 
for the euro area as a whole and for the Member States. Section 3 presents an overview of the 
Draft Budgetary Plans and of the Commission’s assessment of whether they are compliant with 
the fiscal country-specific recommendations.  

1 As set out in Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013 on 
common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive 
deficits of the Member States in the euro area (OJ L 140, 27.5.2013, p. 11). 
2  The  outgoing  governments  of  Luxembourg,  Spain  and  Slovakia  submitted  Draft  Budgetary  Plans  based  on 
unchanged policies. 
3  The  activation  of  the  general  escape  clause  of  the  Stability  and  Growth  Pact  in response  to  the  onset  of  the 
COVID-19  pandemic  has  allowed  Member  States  to  depart  from  some  budgetary  requirements  that  would 
normally apply. 

3 

 
 
 
 
 
 
 
I.  THE EURO AREA ECONOMIC AND FISCAL OUTLOOK 

(i) 

Economic outlook 

The euro area economy has shown resilience in the face of the large economic shocks it 
has endured in recent years but has lost momentum. After the sizeable recovery in 2021 
and 2022, growth in the euro area is expected to slow down to 0.6 % in 2023. High and still 
fast  increasing  consumer  prices  for  most  goods  and  services,  with  the  notable  exception  of 
declining energy prices, have been taking a heavy toll on private consumption, and external 
demand is not providing strong support to the economy. Meanwhile, the response of monetary 
policy to high inflation, with the fastest and largest interest rate increase since the creation of 
the monetary union, is working its way through the economy. On the positive side, the labour 
market  remains  strong,  with  the  unemployment  rate  at  a  record  low  and  participation  and 
employment  rates  at  record  high,  though  signs  of  cooling  are  emerging.  In  2024,  a  gradual 
recovery in growth is expected, by 1.2%, on the back of a continued expansion of employment 
and rising real wages, while disinflation continues. Euro area GDP growth for 2023 and 2024 
is slightly lower in the Commission’s forecast than in the Draft Budgetary Plans (Graph 1.1 
and Annex III Table), which are themselves lower than in the April 2023 Stability Programmes. 

Uncertainty  and  downside  risks  to  the  outlook  have  increased  in  recent  months.  This 
relates primarily to the evolution of Russia’s ongoing war of aggression against Ukraine and 
the Middle East conflict, which may impact energy markets. Furthermore, the transmission of 
monetary policy tightening may weigh on economic activity for longer and to a larger degree 
than projected in this forecast, as the adjustment of firms, households and government finances 
to the high interest rate environment could prove more challenging. Structural changes linked 
in particular to the intensifying impact of climate change, as illustrated by the extreme weather 
conditions and unprecedented wildfires and floods in the summer, also weigh on the outlook. 

Graph 1.1 

Euro area: Real GDP growth, 2020-2024 (%) 

Sources: 2024 Draft Budgetary Plans (DBP2024), European Commission 2023 autumn forecasts (AF2023) and 2023 Stability 
Programmes (SP2023). 

4 

 
 
 
 
 
 
 
 
 
 
 
 
(ii) 

Fiscal outlook 

The Draft Budgetary Plans target a further decline in the euro area deficit in 2024. Having 
fallen to almost half of its 2020 peak at the end of 2022, the euro area deficit is expected to 
have declined further in 2023 to just above 3% of GDP (Graph 1.2a). In 2024, a slight further 
decline is planned in the Draft Budgetary Plans and projected in the Commission forecast, to 
just  below  3%  of  GDP  (and  was  expected  to  be  even  lower  in  the  April  2023  Stability 
Programmes). This is largely due to the almost complete phase out of the remaining energy 
support measures in 2024 and lower subsidies for private investment, which outweigh rising 
interest expenditure. However, the 2024 deficit would still remain well above the 2019 pre-
pandemic level (0.6% of GDP) due to additional non-temporary current expenditure and tax 
cuts adopted after the pandemic. Seven Member States plan a deficit above 3% of GDP in 2024 
(Belgium, France, Italy, Malta, Slovenia, Slovakia and Finland), with a further two projected 
by the Commission forecast (Spain and Latvia).  

Graph 1.2: Euro area: deficit and debt, 2020-2024 (% of GDP) 

a)  Deficit  

b)  Debt 

Sources: 2024 Draft Budgetary Plans (DBP2024), European Commission 2023 autumn forecasts (AF2023) and 2023 Stability 
Programmes (SP2023). 

The debt-to-GDP ratio is  set to decline only marginally in 2024 due to less favourable 
differentials between nominal GDP growth and the cost of servicing public debt. Both the 
Draft Budgetary Plans and the Commission forecast project the debt ratio to fall to around 90% 
at  the  end  of  2024,  i.e.  9 percentage  points  lower  than  the  peak  at  end-2020  (Graph  1.2b). 
According to the Draft Budgetary Plans, eleven Member States project debt above 60% of GDP 
in  2024,  of  which  five  are  above  100%  (Belgium,  Greece,  Spain,  France  and  Italy),  with 
Portugal’s debt planned to drop below 100%. The debt ratio is planned to decline or stabilise 
in more than half the euro area Member States in 2024, including in the five countries with the 
highest debt. However, the Commission forecast projects a slight increase in two countries with 
debt above 100% next year (Belgium and Italy; Graph 1.3b). 

Inflation is set to remain the key driver of the slight fall in debt in 2024, but to a lesser 
extent than in 2023. The high levels of inflation in 2023 (measured by the GDP deflator) have 
driven the reduction in  the debt-to-GDP ratio by increasing the nominal GDP denominator, 
despite weaker growth and high primary deficits (Graph 1.3a). At the same time, despite higher 

5 

0123456720202021202220232024SP2023DBP2024AF2023 
 
 
 
 
 
 
interest rates on new debt issuances, interest expenditure is set to increase only marginally in 
2023 thanks to the long maturity of public debts. With inflation projected to subside in 2024, 
its favourable impact on the debt ratio denominator will lessen. The interest-growth differential 
('snowball  effect')4  is  set  to  become  less  favourable  with  interest  expenditure  also  further 
increasing and primary deficits remaining large. 

Graph 1.3 

Decomposition of the change in the debt ratio (pps of GDP) 

a) 

Euro area 2020-2024 

b)  Member States 2024 

Source: European Commission 2023 autumn forecast 

The debt projections for the upcoming years are subject to high uncertainty. Stochastic 
simulations, which apply a large range of macroeconomic shocks around the central scenario, 
suggest that euro area debt is likely to lie between 85% and 95% of GDP in 2024, and between 
79% and 102% of GDP in 2028 (Annex II).  

Several  factors  weigh  on  fiscal  sustainability.  In  particular,  the  less  favourable  macro-
financial environment is expected to negatively affect public debt dynamics over the coming 
years. The increase in interest rates, notably prompted by heighted inflationary pressures, is 
progressively  feeding  into  interest  payments  and  the  debt  dynamics  to  a  varying  extent 
depending on the level of debt, its maturity structure, and the share of inflation-linked bonds. 
Moreover,  population  ageing  acts  as  a  drag  on  potential  growth,  while  increasing  public 
spending. This points to the importance of implementing reforms and investment to relaunch 
growth potential and pursuing prudent fiscal policies.  

At  the  same  time,  other  factors  may  mitigate  fiscal  sustainability  risks.  These  factors 
include the lengthening of government debt maturities in recent years, stable financing sources 
and EU initiatives such as the Next Generation EU and the Recovery and Resilience Facility 
(RRF), supporting investments and growth-enhancing reforms.  

4 The “snowball effect” captures the impact of interest expenditure on the annual accumulation of debt, as well 
as the impact of real GDP growth and inflation (GDP deflator) on the debt ratio. 

6 

 
 
 
 
 
 
 
 
 
 
II.  THE FISCAL STANCE AND ITS DECOMPOSITION 

(i) 

The aggregate fiscal stance 

The euro area fiscal stance has moved into contractionary territory in 2023, after three 
years  of  crisis-related  expansion.  The  fiscal  stance  represents  the  economic  impulse  from 
both  the  national  and  EU  budgets,  including  all  energy-related  measures,  but  excluding 
COVID-19  temporary  emergency  measures  (which  have  been  fully  phased  out  in  2023). 
According  to  the  Commission  2023  autumn  forecast,  the  euro  area  fiscal  stance  will  be 
contractionary by 0.5% of GDP in 2023 (Graph 2.1).5 This comes after a significant expansion 
of around 4% between 2020 and 2022, due successively to the Covid-19 crisis and the energy 
price boom following the Russian aggression of Ukraine.  

Graph 2.1 

The euro area fiscal stance and components, 2020-2024 (% of GDP) 

Source: European Commission 2023 autumn forecast 

The fiscal contraction in 2023 has primarily been driven by the reduction in expenditure 
on  energy-related measures, while national  investment has  been preserved. Nationally-
financed net primary current expenditure has been reduced in 2023, largely due to the partial 
phase-out  of  energy-related  measures,  introduced  in  2022,  when  they  induced  a  sizeable 
expansion.  A  reduction  in  government  subsidies  for  private  investment  (other  capital 
expenditure) also contributes to the contraction in 2023.6 Conversely, expenditure financed by 
RRF grants and other EU funds is set to increase further, reducing the contractionary nature of 
the fiscal stance. This has supported investment, while public investment financed by national 
budgets has ben preserved, making a neutral contribution.  

5  The  fiscal  stance  measures  the  short-term  impulse  to  the  economy  from  discretionary  fiscal  policy.  This 
Communication assesses the fiscal stance by looking at the annual increase in net primary expenditure relative to 
10-year potential growth. For more details on the computation of the fiscal stance see  footnote 12 in European 
Commission (2023): The 2023 Stability & Convergence Programmes. An Overview, with an Assessment of the 
Euro Area Fiscal Stance, Institutional Paper 253.  
6 The cost of these investment subsidies increased by 0.4% of GDP 2021 and a further 0.3pps in 2022, mainly due 
to measures to accelerate the green transition (e.g. the so-called Superbonus 110% in Italy) and to deal with the 
fallouts  in  the  energy  sector  following  Russia’s  war  of  aggression  against  Ukraine  (e.g.  Uniper  bailout  in 
Germany). 

7 

 
 
 
 
 
 
The fiscal stance is projected to remain contractionary by around ½% of GDP in 2024 on 
the back of an almost complete phase out of the remaining energy-related measures. The 
Commission  forecast,  which  incorporates  the  information  provided  in  the  Draft  Budgetary 
Plans, indicates that the euro area fiscal stance would remain contractionary in 2024, by 0.6% 
of GDP. This is related to the expected almost complete phase-out of the remaining energy 
support measures, which is set to have a contractionary impact of almost 1% of GDP, as well 
as a further decline in government subsidies for private investment. However, this is forecast 
to  be  partly  offset  by  a  projected  increase  in  non-energy  related  net  primary  current 
expenditure.  

Overall euro area investment is expected to expand slightly in 2024, driven by national 
financing. Investment financed by national budgets is set to provide a slightly expansionary 
contribution in 2024. The level of expenditure financed by RRF grants and other EU funds is 
expected  to  stabilise  in  2024.  This  shows  that  the  fiscal  adjustment  does  not  come  at  the 
expense of investment, which should be sustained at a high level to support the green and digital 
transition, strengthen productivity and resilience. 

(ii) 

Considerations on the fiscal stance and fiscal-monetary policy mix   

A contractionary fiscal stance is consistent with the need to improve the sustainability of 
public debt in some Member States and enhance the fiscal position over the medium term. 
This is especially true for large euro area economies with very high debt levels. Debt pressures 
will  continue  to  increase  due  to  inter  alia  ageing  costs,  the  green  and  digital  transition  and 
defence,  as  well  as  the  less  favourable  interest-growth  differential  and  a  still-high  level  of 
public deficits, which need to be reduced significantly. Therefore, temporary measures, such 
as those related to  the energy  crisis,  need to  be  phased out,  with  the corresponding savings 
being used to reduce deficits, not to finance new current spending. At the same time, policies 
should  remain  agile  in  view  of  the  high  uncertainty.  The  Council’s  recommendations  to 
Member  States  seek  to  ensure  medium-term  debt  sustainability  as  well  as  the  raising  of 
potential growth in a sustainable manner, also protecting the economic and monetary union.  

The contractionary stance will also ensure fiscal policy supports monetary policy, which 
has tightened considerably over the past year and is helping inflation to recede from the 
historically high levels witnessed in 2022-23. With an overall contractionary stance, planned 
fiscal policies in 2024 would be broadly consistent with monetary policy. After more than a 
year of continued monetary policy normalisation which has seen policy rates increase by 4.5 
percentage points between July 2022 and September 2023, the ECB decided to pause interest 
rate hikes at its October 2023 meeting.7 While monetary policy will remain data dependent, 
market expectations are that policy rates have now reached their peak and should start coming 
down again by mid-2024. The ECB is also continuing to passively unwind its asset purchase 
programmes  portfolio.  Monetary  policy  transmission  to  financing  conditions  has  been 
particularly  strong  in  the  current  hiking  cycle,  which  has  contributed  to  dampen  domestic 
demand and, together with falling energy prices and lower food inflation, helped annual euro 
area inflation to fall from a peak of over 10% in October 2022 to just below 3% one year later.  

7 For more information on monetary policy, refer to the Commission Staff Working Document ‘2024 report on 
the euro area’, accompanying the recommendation for a Council recommendation on the economic policy of the 
euro area.  

8 

 
 
 
  
 
 
In  this  context,  the  Commission  considers  the  contractionary  fiscal  stance  expected  in 
2023 and 2024 to be broadly appropriate, while acknowledging the need to remain agile 
in view of the high uncertainty. In 2023, the fiscal stance is projected to be contractionary 
(by ½% of GDP), driven by reductions in current expenditure, and is appropriate. In 2024, a 
further contractionary stance (around ½% of GDP) is projected, which would be appropriate, 
while acknowledging the need to remain agile in view of the high uncertainty. The 2024 fiscal 
stance would be more contractionary if all the savings from the phase-out of energy measures 
were used to reduce the deficit, as recommended by the Council. The use of these savings for 
the introduction of new current expenditure could weigh on the long-term adjustment needs of 
Member States if this new spending is permanent and not financed by compensatory measures.  

Importantly, the contraction does not come at the expense of investment, which will be 
increased across the euro area. In both 2023 and 2024, the overall contribution of investment 
is  projected  to  be  expansionary.  This  will  support  sustainable  growth  in  the  long-term,  in 
contrast  to  the  substantial  cuts  to  investment  during  the  financial  crisis.  The  contraction 
expected in other capital expenditure relates to the withdrawal of specific temporary measures 
in large Member States and is thus not reflective of a decline in support for investment. 

(iii)  Overview of Member States’ fiscal stance  

Member States’ fiscal stance in 2023 

Despite  an  overall  contractionary  euro  area  fiscal  stance  in  2023,  the  fiscal  stance  has 
been  expansionary  in  a  majority  of  Member  States,  mostly  driven  by  higher  current 
spending.  On  12  July  2022,  the  Council  recommended  that  Member  States  with  high  debt 
should  ensure  a  prudent  fiscal  policy,  while  those  with  low/medium  debt  should  adopt  an 
overall neutral policy stance. The focus for 2023 was on developments in net primary current 
expenditure  net  of  (targeted)  energy  support  measures  and  refugee  costs.  However,  in  a 
majority of Member States,  the overall fiscal  stance has been expansionary in  2023 (Graph 
2.2).8 Four of them are projected to have a deficit above 3% of GDP. Fourteen Member States 
are projected to have an expansionary contribution to the fiscal stance from net primary current 
spending not related to energy or refugees, of which five had been recommended to limit this 
growth (Graph 2.3).9  In nine Member States, increased investment financed by both national 
and EU budgets has been the main driver of the expansionary stance, which is supportive of 
long-term growth. Overall, the quality of energy support measures has not improved in 2023, 
with three quarters of them untargeted. In spring 2024, the Commission will assess, based on 
the  outturn  data  for  2023,  compliance  with 
the  Council’s  fiscal  country-specific 
recommendations.  

Investment has expanded in most Member States in 2023, supported by both national and 
EU funding. In July 2022, all Member States were recommended to expand public investment 
for the green and digital transitions. Most Member States increased investment, either through 
national or EU financing. Expenditure financed by RRF grants and other EU funds is set to 
increase or stabilise in all Member States except two.   

8 The significant expansion in Slovakia is largely due to the timing of the absorption of the European structural 
and investment funds as well as an increase in energy measures.  
9 For simplicity and consistency across years, the focus of the analysis here is based on all energy measures. 

9 

 
 
 
 
 
 
Graph 2.2 

Fiscal stance and components of euro area Member States, 2023 (% of GDP) 

Source: European Commission 2023 autumn forecast 

Graph 2.3 

Net primary current expenditure (nationally financed), contribution to fiscal stance and drivers, 2023 (% of 
GDP) 

Source: European Commission 2023 autumn forecast 

Member States’ fiscal stance in 2024 

In  2024,  the  fiscal  stance  is  expected  to  be  contractionary  in  14  Member  States  and 
expansionary or broadly neutral in the others. There is a wide range across Member States, 
from  a  contractionary  stance  of  more  than  2%  of  GDP  to  an  expansionary  stance  of  1.5%. 
Based  on  the  Commission’s  forecast,  the  fiscal  stance  is  expected  to  be  contractionary  or 
broadly neutral in most Member States (Graph 2.4), while it is set to be expansionary in five 
Member  States.  A  contractionary  stance  is  projected  in  all  Member  States  with  debt  above 
100%, bar Portugal, which is however projected to have reached its MTO in 2023. This stance 
is consistent with their fiscal recommendations to limit the growth of nationally financed net 
primary expenditure.  

10 

-6.5-5.5-4.5-3.5-2.5-1.5-0.50.51.52.5SKLUBECYHRLTELEELVFIIEESSIPTMTDEFRNLITATEARRF grants and EU fundsOther capital expenditureNationally financed investmentNationally financed  primary current expenditureFiscal stanceContractionary/ ConsolidationExpansionary/Relaxation 
 
 
 
 
 
 
 
Graph 2.4 

Fiscal stance and components of euro area Member States, 2024 (% of GDP) 

Source: European Commission 2023 autumn forecast 

While energy measures are expected to make a contractionary contribution in almost all 
Member  States,  non-energy-related  current  expenditure  is  expansionary  in  many.  The 
phasing  out  of  energy  support  measures  would  lead  to  a  contraction  in  overall  net  primary 
current  expenditure  in  most  Member  States  (Graph  2.5).  However,  non-energy-related  net 
current expenditure is also increasing in many Member States. Therefore, in more than half of 
Member States, the overall contraction in current expenditure is projected to be less than if the 
energy measures were fully phased out. 

Graph 2.5 

Net primary current expenditure (nationally financed), contribution to fiscal stance and 
drivers, 2024 (% of GDP) 

Source: European Commission 2023 autumn forecast 

Although overall investment is expected to expand in 2024 in most Member States, the 
contribution  to  the  fiscal  stance  of  both  national  and  EU-financed  investment  varies 
across Member States. Based on the Commission’s forecast, investment financed by national 
budgets is projected to be preserved or have an expansionary contribution to the fiscal stance 

11 

-3.0-2.0-1.00.01.02.03.0PTHRLTLVFINLBECYLUIEATESDEFREEELSIITMTSKEARRF grants and EU fundsOther capital expenditureNationally financed investmentNationally financed  primary current expenditureFiscal stanceContractionary/ ConsolidationExpansionary/Relaxation 
 
 
 
 
 
 
in almost all Member States in 2024 (Graph 2.4). In a small number of Member States, the 
contribution of EU funds and/or nationally financed investment would be contractionary only 
due to the timing of the absorption of EU structural and investment funds and related spending 
for national co-financing.10 The support to investment provided by RRF grants meanwhile is 
projected  to  increase  or  remain  stable,  allowing  the  EU  to  continue  to  finance  investment 
projects and productivity-enhancing reforms without giving rise to higher deficits and debt in 
national budgets. Other capital expenditure is set to provide large contractionary contributions 
in  some  Member  States  (see  footnote  6).  As  a  share  of  GDP,  overall  public  investment  is 
expected to rise on its 2023 levels in most Member States (Graph 2.6).  

Graph 2.6 

Public investment (nationally financed vs. RRF loans vs. other EU funds), in 2023 and 2024 (% of 
GDP) 

Source: European Commission 2023 autumn forecast 

III.  OVERVIEW OF THE DRAFT BUDGETARY PLANS 

Most euro area Member States submitted their Draft Budgetary Plans  on time. In line 
with Article 6 of Regulation (EU) No 473/2013, most Member States submitted  their Draft 
Budgetary  Plans  for  2024  by  the  mid-October  deadline.11  For  Luxembourg,  Spain  and 
Slovakia, ‘no-policy-change’ Draft Budgetary Plans were submitted by caretaker governments. 
The budgetary figures presented in their Draft Budgetary Plans do not represent policy targets 
and draft budget laws were not presented to national parliaments. Updated Draft Budgetary 
Plans should be submitted in principle as soon as a government with full budgetary powers 
takes office.  

In its assessment of the Draft Budgetary Plans, the Commission has followed a two-step 
approach. The Commission assessed the consistency of the Draft Budgetary Plans with the 
Council Recommendations on fiscal policy for 2024. In the first step, the Commission assessed, 
for  countries  not  projected  to  be  at  the  MTO,  whether  net  expenditure  growth  in  2024  is 
projected to respect the recommended maximum growth rate. In the second step, other elements 
of the Council recommendation were assessed, notably those concerning the phasing out of the 

10 All Member States are assessed to be in line with the Council recommendation on preserving nationally financed 
investment, as seen in Section III. 
11 In accordance with Article 6(3)(d) of Regulation 473/2013, some Draft Budgetary Plans contained quantitative 
estimates on the distributional effects of the planned budgetary measures.  

12 

 
 
 
 
 
 
 
 
energy support measures, the use of the related savings to reduce the deficit, as well as the 
preservation of nationally financed investment. A positive conclusion from the first step was 
modulated  (downgraded)  taking  into  account  the  compliance  with  the  three  other  elements 
assessed  in  the  second  step.  The  Commission’s  assessment  will  consider  whether  Member 
States have complied with the recommendations, including the broader goal to promote fiscal 
sustainability and growth. 

The following is a summary of the Commission Opinions on the 2024 Draft Budgetary 
Plans.12  The  Opinions  are  based  on  the  Commission  2023  autumn  forecast  including  the 
information in the Draft Budgetary Plans13: 

-  Step 1: Limiting expenditure growth or maintaining the MTO: 

The Commission forecast projects five Member States to be at  or close to their 
MTO  in  2024.  Cyprus  and  Ireland  are  projected  to  remain  at  the  MTO  in  2024.  In 
addition,  based  on  the  2023  autumn  forecast,  Portugal  and  Estonia  are  now  also 
expected to achieve the MTO in both 2023 and 2024. Lithuania is projected to be close 
to its MTO in 2024. 

Net expenditure is projected in line with the recommended maximum for Austria, 
Germany, Greece, Spain, Malta and Slovenia.  

Net  expenditure  is  projected  not  to  be  fully  in  line  with  the  recommended 
maximum for the following Member States: 

•  For  Luxembourg,  a  small  deviation  above  the  recommended  maximum  is 

estimated.  

•  Latvia, the Netherlands and Slovakia are also projected to have growth of net 
primary  expenditure  above  the  recommended  maximum.  However,  the 
Commission  took  into  account  for  these  three  Member  States  that  net 
expenditure in 2023, based on the autumn forecast, is projected to be lower than 
what  was  expected  at  the  time  of  the  recommendation.  This  base  effect  is 
particularly  sizeable  for  these  Member  States.  If  net  expenditure  in  2023  in 
Latvia, the Netherlands and Slovakia had been the same as expected at the time 
of  the  recommendation,  the  resulting  growth  rate  of  net  expenditure  in  2024 
would be at or below the recommended maximum growth rate.  

• 

In the case of Italy, the recorded growth rate of net expenditure is below the 
maximum recommended by the Council. However, the current estimates of net 
expenditure in 2023 are higher than expected at the time of the recommendation. 

12 The Opinions are accompanied by a Statistical Annex including the necessary information to assess Member 
States’ plans. 
13 Upon receipt of the Draft Budgetary Plans the Commission conducted a preliminary assessment ‘at face value’ 
and sent a letter to 7 Member States (Belgium, Croatia, Finland, Lithuania, Latvia, the Netherlands and Slovakia) 
with its preliminary observations and a request for further information (the letters were sent on 27 October 2023, 
except for the letter to Latvia, which letter was sent on 3 November 2023). The information received from these 
Member States has been taken into account in the Commission's assessments. 

13 

 
 
 
 
 
If net expenditure in 2023 were as expected at the time of the recommendation, 
the  resulting  growth  rate  of  net  expenditure  in  2024  would  be  above  that 
recommended.14 Therefore, net expenditure growth is assessed as not fully in 
line.  

Net  expenditure is  projected at  risk of being not in line  with the recommended 
maximum in Belgium, Croatia, Finland and, to a lesser extent, France. Of those 
four, in Finland and Croatia, national fiscal policy is projected to be expansionary.15 

-  Step 2: Phasing-out energy measures, using the related savings for deficit reduction and 

preserving nationally financed investment:  

Most Member States are projected to phase out the remaining energy measures, 
but  many  are  not  using  the  corresponding  savings  for  deficit  reduction.  Most 
Member States are winding down the energy support measures as soon as possible in 
2023  and  2024.  However,  this  is  not  the  case  for  Croatia,  Germany,  France, 
Luxembourg, Malta and Portugal, which are projected to have significant measures still 
in force in 2024. Concerning the use of the related savings to reduce the government 
deficit,  Austria,  Belgium,  Croatia,  Finland,  Germany,  Latvia,  Luxembourg,  the 
Netherlands and Slovakia risk being not in line with the recommendation, as part of the 
savings  are  not  expected  to  be  used  to  reduce  their  government  deficit.16  Italy  is 
assessed as not fully in line with this part of the recommendation. 

All Member States  are  considered in line with  the recommendation to preserve 
their nationally financed investment in 2024. For most Member States, the autumn 
forecast projects that nationally financed investment as a share of GDP does not decline 
compared to 2023. The exceptions are Greece and, to a lesser extent, Spain. However, 
this is due to the timing of the programming periods of the EU structural funds and the 
related nationally financed contributions. As a result, public investment in 2024 in these 
two Member States is assessed as respecting the Council recommendations.  

Overall,  seven  Member  States  are  considered  to  be 
line  with  the  fiscal 
recommendations, while nine are not fully in line and four risk being not in line. Cyprus, 
Estonia,  Greece,  Spain,  Ireland,  Lithuania  and  Slovenia  are  in  line  with  the  fiscal 
recommendations. Austria, Germany, Italy, Luxembourg, Latvia, Malta, Netherlands, Portugal 
and Slovakia are not fully in line. Germany, Malta and Portugal are invited to wind down the 
energy  support  measures  as  soon  as  possible  in  2023  and  2024.  Italy,  Latvia  and  the 
Netherlands are invited to stand ready to take necessary measures. Luxembourg and Slovakia 
are invited to ensure their new plan will be in line with the Council recommendation. Belgium, 

in 

14 This is mainly driven by two factors concerning the tax credits for energy-efficiency renovation of residential 
buildings: (i) a higher-than-expected take up in 2023; and (ii) legislative amendments changing the nature of the 
tax  credits,  which  imply  that  they  have  no  expected  impact  on  2024  expenditure.  For  more  information,  see 
Eurostat advice of September 2023:  (IT+Advice+on+recording+of+2023+Superbonus.pdf (europa.eu)). 
15 National fiscal policy is defined as all nationally-financed expenditure, excluding expenditure financed by RRF 
grants and other EU funds.  
16  Portugal  and  Lithuania  also  fall  into  this  category,  but  this  part  of  the  recommendation  does  not  apply  to 
countries projected to be at or close to the MTO in 2024. 

14 

 
 
  
 
 
Finland, France and Croatia risk being not in line and are invited to take necessary measures 
within the national budgetary process to ensure that fiscal policy in 2024 will be in line with 
the Council Recommendation.  

Finally,  headline  budget  deficits  are  generally  declining  in  the  euro  area,  but  are 
projected above the Treaty reference value of 3% of GDP for a number of Member States 
in 2023 and 2024. Eight Member States are projected to have a deficit above 3% of GDP in 
both 2023 and 2024 (Belgium, Spain, France, Italy, Latvia, Malta, Slovenia and Slovakia) and 
one  additional  Member  State  in  2024  only  (Finland).  In  spring  2024,  the  Commission  will 
propose to the Council to open deficit-based Excessive Deficit Procedures on the basis of the 
outturn data for 2023, in line with existing legal provisions. Member States should take account 
of this when executing their 2023 budgets and when conducting their fiscal policies in 2024. 

15 

 
 
 
 
 
ANNEX I: The methodology and assumptions underpinning the Commission 2023 
autumn forecast17 

The  assumptions  underlying  the  Commission  2023  autumn  forecast,  which  is  produced 
independently by Commission staff, are explained in the forecast document itself.18 Budgetary 
data  up  to  2022  are  based  on  data  notified  by  Member  States  to  the  Commission  before  1 
October  2023  and  validated  by  Eurostat  on  23  October  2023.  Eurostat  has  made  no 
amendments to, and has no reservations on, these data.  

For the forecast, measures in support of financial stability have been recorded in line with the 
Eurostat Decision of 15 July 2009.19 Unless reported otherwise, capital injections known in 
sufficient detail have been included in the forecast as financial transactions, i.e. increasing the 
debt, but not the deficit. State guarantees on bank liabilities and deposits are not included as 
government expenditure, unless there is evidence that they have been called on. However, loans 
granted to banks by the government sector usually add to government debt. 

For  2024,  budgets  adopted  or  presented  and  all  other  measures  known  in  sufficient  detail, 
including the information in the Draft Budgetary Plans, are taken into consideration. For 2025, 
the ‘no-policy-change’ assumption used implies the extrapolation of revenue and expenditure 
trends and the inclusion of measures that are known in sufficient detail. 

European  aggregates  for  general  government  debt  in  the  forecast  years  2023-2025  are 
published on a non-consolidated basis (i.e. not corrected for intergovernmental loans). General 
government debt projections for individual Member States in 2023-25 include the impact of 
guarantees to the European Financial Stability Facility, bilateral loans to other Member States, 
and the participation in the capital of the European Stability Mechanism as planned on the cut-
off date of the forecast.20 

17 According to Article 7(4) of Regulation (EU) No 473/2013, “the methodology and assumptions of the most 
recent economic forecasts of the Commission services for each Member State, including estimates of the impact 
of aggregated budgetary measures on economic growth, shall be annexed to the overall assessment”.  
18  
https://economy-finance.ec.europa.eu/system/files/2023-11/ip258_en.pdf  

Methodological assumptions underlying the Commission 2023 autumn economic forecast, available at: 

19 Available at: FT - Eurostat Decision - 9 July 2009 _3_ _final_ (europa.eu) 

20 In line with the Eurostat decision of 27 January 2011 on the statistical recording of operations undertaken by 
the EFSF, available at: http://ec.europa.eu/eurostat/documents/2995521/5034386/2-27012011-AP-EN.PDF.  

16 

 
 
 
 
 
 
ANNEX II: Debt sustainability analysis and sensitivity analysis  

This  Annex  presents  a  sensitivity  analysis  of  public  debt  developments  to  possible 
macroeconomic shocks, as required by Article 7 of Regulation (EU) No 473/2013. Stochastic 
debt  projections  are  used  to  assess  the  possible  impact  on  public  debt  dynamics  of  risks  to 
nominal  GDP  growth,  financial  market  developments  and  fiscal  shocks  affecting  the 
government budgetary position (21). 

The stochastic projections account for macroeconomic uncertainty around one ‘central’ debt 
projection  scenarios  in  2024-2028:  the  Commission  2023  autumn  forecast  scenario.  In  this 
scenario, the usual ‘no-fiscal policy change’ assumption is applied beyond the forecast horizon 
(22). 

Shocks are applied to the macroeconomic conditions assumed in the central scenario to obtain 
the distribution of possible debt paths (the ‘cone’ in the fan charts shown in Graph III.1). The 
cone corresponds to a wide set of possible macroeconomic conditions, with up to 2000 shocks 
simulated on growth, interest rates and the primary balance. The size and correlation of these 
shocks reflect historical volatility and relationships between these variables (23). Therefore, the 
fan charts provide probabilistic information on euro area debt dynamics, taking into account 
the  possible  occurrence  of  shocks  to  growth,  interest  rates  and  the  primary  balance  of  a 
magnitude and correlation mirroring the past developments. 

The fan chart reports the projected debt path under the central scenario as a red line. The median 
outcome of the simulations is shown as a dashed black line. The cone covers 80% of all possible 
debt  paths,  while  the  paths  derived  from  the  20%  least  likely  shocks  are  not  shown.  The 
differently shaded areas within the cone represent different portions of the overall distribution 
of possible debt paths.  

For 2024, the simulations suggest that, with an 80% probability, the euro area debt ratio will 
be between 85% and 95% of GDP under the Commission scenario. By 2028, there would be a 
50%  probability  of  a  debt  ratio  higher  than  around  90%  of  GDP  under  the  Commission 
scenario.  

Additional risks surround these projections. As the size and correlation of the shocks reflect 
the variables’ historical behaviour, the methodology does not capture real-time uncertainty, in 
particular related to the output gap assessment. This uncertainty suggests an additional source 
of risks on future debt paths that is not reflected in this analysis. Another source of uncertainty 
relates  to  the  realisation  of  contingent  liabilities,  as  the  fan  charts  only  capture  risks  that 
materialised in the past through a deterioration of the primary balance. 

21 The methodology for stochastic public debt projections used here is presented in the European Commission's 
Debt Sustainability Monitor 2019, Annex A7, and in Berti K. (2013), "Stochastic public debt projections using 
the historical variance-covariance matrix approach for EU countries", European Economy Economic Paper No. 
480. 

22  The  Commission  2023  autumn  forecast  incorporates  fiscal  policy  measures  that  were  adopted  or  at  least 
credibility announced and information that was available as of 31 October 2023. Beyond 2025 (the last forecast 
year), the structural primary balance is only modified by the projected (net) costs of ageing.  

23 Shocks are assumed to follow a joint normal distribution. 

17 

 
 
 
 
 
 
Graph II.1: Fan charts from stochastic public debt projections around the Commission’s 
forecast scenario and the Draft Budgetary Plans’ forecast scenario; euro area  

Note: the dashed line represents the median while the red line represents the baseline

18 

p10p20p40p60p80p906070809010011020212022202320242025202620272028% of GDPEuro area public debt projections (based on the Commission's Autumn forecast 2023)MedianBaseline 
 
 
ANNEX III: Tables of macro and fiscal indicators 

Real GDP growth (%) 

Country 
BE 
DE 
EE 
IE 
EL 
ES 
FR 
HR 
IT 
CY 
LV 
LT 
LU 
MT 
NL 
AT 
PT 
SI 
SK 
FI 
EA20 

SP 
1.0 

0.2 

-1.5 

5.6 

2.3 

2.1 

1.0 

2.2 

1.0 

2.8 

0.0 

0.5 

2.4 

4.1 

1.6 

0.3 

1.8 

1.8 

1.3 

-0.2 

1.1 

2023 
DBP 
1.0 

0.4 

-2.0 

2.0 

2.3 

2.4 

1.0 

2.8 

0.8 

2.4 

1.0 

-0.4 

1.5 

4.1 

0.7 

-0.8 

2.2 

1.6 

1.3 

0.0 

0.9 

COM 
1.4 

-0.3 

-2.6 

-0.9 

2.4 

2.4 

1.0 

2.6 

0.7 

2.2 

-0.2 

-0.4 

-0.6 

4.0 

0.6 

-0.5 

2.2 

1.3 

1.3 

0.1 

0.6 

SP 
1.7 

1.8 

3.0 

4.1 

3.0 

2.4 

1.6 

2.6 

1.5 

3.0 

2.0 

3.0 

3.8 

4.5 

1.4 

1.8 

2.0 

2.5 

1.8 

1.3 

1.9 

2024 
DBP 
1.3 

COM 
1.4 

1.6 

2.7 

4.5 

3.0 

2.0 

1.4 

2.8 

1.2 

2.9 

2.5 

1.7 

2.5 

4.2 

1.5 

1.2 

1.5 

2.8 

1.3 

1.2 

1.7 

0.8 

1.9 

3.0 

2.3 

1.7 

1.2 

2.5 

0.9 

2.6 

2.4 

2.5 

1.4 

4.0 

1.1 

1.0 

1.3 

2.0 

1.7 

0.8 

1.2 

SP 
-5.1 

-4 ¼ 

-4.3 

1.8 

-1.8 

-3.9 

-4.9 

-0.7 

-4.5 

2.0 

-4.0 

-2.2 

-1.5 

-5.0 

-3.0 

-3.2 

-0.4 

-4.1 

-6.3 

-2.6 

-3.8 

General government debt (% of GDP) 

2023 
DBP 
108.3 

65 ¼ 

19.4 

41.4 

COM 
106.3 

64.8 

19.2 

43.0 

159.3 

160.9 

108.1 

107.5 

109.7 

109.6 

60.7 

60.8 

SP 
106.7 

67 ¾ 

20.2 

40.5 

162.6 

111.9 

109.6 

62.6 

SP 
107.1 

66 ½ 

23.6 

38.2 

150.8 

109.1 

109.5 

59.8 

2024 
DBP 
108.1 

64 ¾ 

20.9 

38.6 

152.3 

106.3 

109.7 

58.0 

COM 
106.4 

63.6 

20.5 

41.4 

151.9 

106.5 

109.5 

58.8 

142.1 

140.2 

139.8 

141.4 

140.1 

140.6 

81.1 

39.6 

37.8 

26.1 

54.5 

48.4 

77.0 

81.8 

39.9 

37.9 

25.0 

53.1 

47.7 

76.4 

78.4 

41.7 

37.3 

26.8 

53.3 

47.1 

76.3 

72.9 

39.7 

37.7 

27.5 

55.7 

48.7 

75.1 

107.5 

103.0 

103.4 

103.0 

68.9 

58.7 

74.4 

91.9 

69.9 

57.1 

74.2 

90.7 

69.3 

56.7 

74.3 

90.4 

66.5 

59.3 

76.9 

90.8 

74.7 

41.0 

39.8 

27.8 

55.6 

46.9 

76.4 

98.9 

68.9 

60.0 

76.8 

90.0 

71.5 

42.3 

38.3 

28.7 

55.8 

46.6 

75.6 

100.3 

68.4 

59.9 

76.9 

89.7 

COM 
-4.9 

-1.6 

-2.4 

0.6 

-0.9 

-3.2 

-4.4 

-1.8 

-4.4 

2.1 

-3.1 

-2.3 

-2.1 

-4.6 

-1.8 

-2.4 

0.1 

-3.3 

-6.5 

-3.2 

-2.8 

Headline balance (% of GDP) 
2024 
2023 
DBP 
DBP 
-4.6 
-5.2 

COM 
-4.9 

SP 
-4.2 

-2 ½ 

-3.3 

1.6 

-2.2 

-3.9 

-4.9 

-0.3 

-5.3 

2.5 

-2.7 

-1.9 

-1.9 

-5.0 

-1.5 

-2.7 

0.8 

-4.5 

-6.2 

-2.4 

-3.3 

-2.2 

-2.9 

0.9 

-2.3 

-4.1 

-4.8 

-0.1 

-5.3 

2.3 

-3.2 

-1.6 

-1.9 

-5.1 

-0.5 

-2.6 

0.8 

-3.7 

-5.7 

-2.4 

-3.2 

-1 ¾ 

-4.2 

2.8 

-0.8 

-3.0 

-4.4 

-1.5 

-3.7 

2.3 

-2.5 

-1.7 

-1.7 

-4.3 

-2.6 

-1.6 

-0.2 

-2.8 

-4.7 

-2.6 

-2.6 

-2.0 

-2.9 

1.5 

-1.0 

-3.0 

-4.4 

-1.9 

-4.3 

2.8 

-2.8 

-2.9 

-2.7 

-4.5 

-2.4 

-2.7 

0.2 

-3.8 

-6.5 

-3.2 

-2.9 

19