Fiscal policy contribution essential to continuing the euro area's economic recovery in 2018

The EESC disagrees with the Commission's proposal for a broadly neutral fiscal stance, and instead advocates a moderate positive fiscal stance of around 0.5% of GDP. In its opinion on Euro area economic policy 2018, the Committee states that the budgetary effort should be borne mainly by countries with current account surpluses and fiscal space.

In view of the remaining fragile, incomplete and atypical economic recovery in the euro area and the changes to the ECB's monetary policies that have been announced, the EESC calls for fiscal policies to support monetary policies. The EESC's recommendations also consider low investment levels, an external current account surplus and a significant labour market downturn, among other aspects.

"A fiscal stimulus with a focus on public investment would both deliver stronger demand in the short term and expand growth potential in the long term, thus addressing the question of public debt sustainability", said the rapporteur, Javier Doz Orrit (Workers Group, ES).

Public investment needs to focus not just on infrastructure but also on social investment, and domestic consumption should be promoted mainly through wage increases.

"As regards the application of fiscal rules, we recommend that public expenditure on investment be excluded from the calculations. This would contribute to more inclusive growth and upwards convergence", said Mr Doz Orrit.

The EESC welcomes the Commission's policy objectives – sustainable and inclusive growth, resilience and convergence – as well as its priorities for structural reforms, and believes that reforms must enhance productivity and support the creation of high-quality jobs and the reduction of inequalities. It calls for the implementation of effective measures to combat the harmful erosion of public budgets and supports the necessary steps for deepening the EMU. (jk)