Luxembourg Finance Minister Shows Support for 'Cautious' EU Fiscal Policies in 2024

Luxembourg's Minister of Finance, Yuriko Backes, took part in the Eurogroup and Economic and Financial Affairs Council (ECOFIN) meetings in Brussels, Belgium on Thursday 13 and Friday 14 July 2023.

During the Eurogroup meeting on Thursday, the participating finance ministers discussed the direction of fiscal policy in the euro area for 2024. They went on to adopt a joint statement in this area. As Eurogroup President Paschal Donohoe explained, the agreed fiscal stance for next year is "to pursue a determined, gradual and realistic fiscal consolidation that includes reforms, but also looks to increase investment through private and public sources, as well as through EU support and instruments."

Minister Backes commented: "Cautious fiscal policies in 2024 will allow Member States to relieve their public finances as well as rebuild the necessary fiscal buffers and help bring inflation under control."

The 20 ministers also had an exchange on the international role of the euro and the new finance ministers of Finland and Greece presented their respective governments' political priorities. In inclusive format, the finance ministers then discussed the future of European financial and capital markets and the digital euro project.

During the ECOFIN breakfast on Friday, the ministers assessed the progress of discussions on the reform of the European economic governance framework. Minister Backes emphasised: "We need a reform that works for all countries, regardless of their size or level of indebtedness, in order to ensure the long-term sustainability of public finances in Europe. An approach based on multilateral surveillance, combined with a central role of the ECOFIN Council, should be maintained in the future framework."

At ECOFIN, the European Commission presented its proposal for an adjusted package for the next generation of own resources. The ministers debated the proposals and agreed to continue discussions at future meetings. They also affirmed support for Ukraine in the context of the mid-term review of the multiannual financial framework. Minister Backes commented: "When it comes to Ukraine, with the commitment of our international partners, the top priority must remain our unwavering support for the country, which is the political raison d'être of this review. Therefore, we believe it is important to take a closer look at the new facility for Ukraine, its distribution of grants and loans, as well as the role envisaged for the European Investment Bank (EIB) regarding the investment framework for Ukraine."

In addition, the ministers exchanged views on a legislative proposal on the EU Customs Union, aimed at simplifying procedures, making better use of new technologies and creating a European customs authority. Minister Backes expressed Luxembourg's support for this proposal: "I would like to thank the Commission for presenting such an ambitious and essential proposal. Reducing the administrative burden for all actors in the supply chain will lead to a more competitive customs union. The establishment of a common data space would allow a better investment of IT resources, as it aims to reduce IT development costs for Member States and to simplify customs formalities. The creation of an EU Customs Authority will give us the opportunity to explore new synergies through a coordinated central approach. The customs union would indeed benefit from better governance, centralised risk management to protect the internal market and a coordinated crisis management."

Luxembourg's Finance Minister also participated in the launch ceremony of the EIB's EU for Ukraine Fund on Thursday. Luxembourg has pledged €1.3 million to support this initiative.

On the sidelines of these meetings, Minister Backes had a bilateral meeting with Spain's First Deputy Prime Minister and Minister of Economic Affairs and Digital Transformation, Nadia Calviño Santamaría. Their discussions focused in particular on the priorities of the Spanish Presidency of the Council of the European Union, as well as on various European topics.