The implementation of the EU’s new Economic Governance Framework, in force since April 2024, marks a critical juncture for European fiscal policy. In this context, IFIs play a central role in assessing the credibility of national fiscal projections and monitoring compliance with the new net expenditure growth paths. However, fewer than 40% of IFIs currently view their countries’ expenditure paths as plausible, raising early concerns about the feasibility of delivering on the framework’s debt reduction ambitions.

Some important lessons can be drawn from the first round of Medium-Term Plans (MTPs). The engagement of stakeholders, including IFIs and national parliaments, varied significantly across Member States. To improve the process, IFIs emphasised the need for more comprehensive analysis, greater stakeholder involvement, and sufficient information both at the national and EU level to assess the fiscal trajectory. IFIs’ involvement in the endorsement/assessment of the next plans in all Member States would contribute to the success of the EU framework.

2024 marks a turning point in European fiscal policy with the first steps being taken in the implementation of the new EU Economic Governance Framework. This represents a significant evolution in fiscal oversight, shifting towards a streamlined system that places greater emphasis on national ownership, flexibility and debt sustainability. As Member States navigate this transition, the role of Independent Fiscal Institutions (IFIs) is more crucial than ever in ensuring robust fiscal oversight and providing technical assessments that enhance transparency and accountability.

After a prolonged period of stagnation, the EU economy is expected to rebound in 2024. According to EU projections by national IFIs, the EU’s real GDP is set to grow by 1.1 % in 2024 on average, compared with 0.4 % in 2023. Geopolitical tensions could disrupt supply chains and increase prices, affecting trade and investment. Elections in several EU countries may lead to policy uncertainty and affect public finances. Government deficits in some EU countries might exceed 3% of GDP.

According to EU national independent fiscal institutions’ (IFIs) projections, the EU’s real GDP growth is expected to gain some momentum in 2024 while inflation is set to decrease further. The recovery however will be moderate and highly uncertain. Growth in 2024 is forecast to be 1.4 % on average, compared to 0.6 % in 2023, according to IFIs and governments estimates.

To assess the potential of independent fiscal institutions (IFIs) to support compliance with EU fiscal rules, this study examines which institutional aspects are associated with IFI effectiveness. Our dataset comprises 30 IFIs in 26 EU member countries, obtained from a survey of members of the Network of EU IFIs in spring 2022.

2023 began with a slowdown of the EU economy while the second half of the year seems to be setting itself up for a slow but steady recovery from the pandemic’s devastating effects, the Russian invasion of Ukraine and the subsequent energy price rises. Combined with the ongoing winding-down of supply-side pressure and the widespread and coordinated tightening of monetary policy by most EU central banks, inflation has declined from its previous record highs.

The Network of EU Independent Fiscal Institutions (EU IFIs) welcomes the European Commission’s publication on 26 April 2023 of a package of legislative proposals to reform the EU’s Economic Governance. The Commission aims to achieve stronger national ownership, simpler rules taking different fiscal challenges into account, as well as facilitate reforms and investment for EU priorities and to provide more effective enforcement.

EU countries have a two-tier framework to oversee fiscal policy, with budgetary rules and institutions at both the EU and domestic levels. In April 2023, the European Commission published its proposals for fiscal reform under the economic governance review. They call for strengthening EU and domestic frameworks to promote national ownership.

The Network welcomes the publication of the European Commission Communication. The Network supports the objective to reach a consensus on reform ahead of Member States’ budgetary processes for 2024. The extended reliance on the “exceptional circumstances” clauses risks undermining EU and national fiscal frameworks, which could make it increasingly difficult to return to a rules-based approach at a time when public debt is high.

With the rapid increase in consumer prices, the macroeconomic outlook remains uncertain. According to IFIs’ projections, 2022 saw positive dynamics for the EU's real GDP growth at around 3 % on average . Nevertheless, growth is expected to be lower in 2023 at 1 % on average.

The paper finds that overall EU IFIs appear to have good capacity to carry out a wide range of tasks and play an enhanced role, but there is some scope to ensure that all institutions are able to perform in line with EU peers in all areas. 

While 2022 began with the continued economic recovery from the Covid-19 crisis, Russia’s invasion of Ukraine has contributed to a sharp increase in global energy and food prices. Combined with ongoing supply-side pressures, this has led to a rapid re-evaluation of the economic outlook and associated risks, a shift in monetary policy stance, significant corrections in financial markets, and new measures by governments to manage the increases in the cost-of-living. This EFM provides an overview of the activities of 30 national IFIs, and the fiscal measures adopted in response to rising inflation in 25 EU Member States and the United Kingdom.

The transition to net zero emissions by 2050 requires substantial efforts from European governments, which is expected to have an enormous impact on the public finances. Without appropriate assessment, the transition could further pose significant fiscal risks.

This note sets out how the enhanced role for national IFIs - including the proposed obligation on the EU institutions to take IFI input into consideration when taking decisions – could be operationalised.

This note sets out more detailed proposals regarding minimum standards and mandates. Raising the minimum standards would be required to ensure that all institutions can deliver the proposed extension of the minimum mandates, particularly with respect to the resources of IFIs and their access to information.

As the EU enters the third year of the COVID-19 pandemic, the future macroeconomic outlook remains unusually uncertain due to the emergence of new variants. A strong economic recovery was reported in 2021 (5% on average), which is expected to continue in 2022 but at a slightly slower pace (4% on average). The fiscal stance in most countries remained very supportive throughout 2021, as governments continued with large-scale measures to support the economy. In the 25 countries covered by this European Fiscal Monitor (EFM), policy measures cost on average about 5% of GDP in 2020 and 4% of GDP in 2021.

Output gaps continue to play a major role among Independent Fiscal Institutions (IFIs) for assessing the appropriate fiscal stance, underlying or structural deficits and when monitoring fiscal rules. IFIs should therefore expand and improve upon existing models, testing different approaches and incorporating them into the analysis of potential output and the output gap.

The European Commission is currently undertaking a review of the EU economic governance framework, and is seeking the views of the EU IFIs. National IFIs have substantial experience and expertise in monitoring fiscal policy in EU countries and in the application of the EU fiscal rules. This paper draws on those experiences as a contribution to the wider debate.

As vaccines are rolled out and restrictions relaxed, European economies are recovering from the Covid-19 pandemic. Nevertheless, most recent projections for 2021 are less optimistic than earlier estimates, given the further intense disruption caused by Covid-19 early this year. Both the projected real GDP growth and public balances were revised downwards by on average 1 percentage point.

Twelve months after the start of the first Covid-19 lockdowns, European economies remain severely affected. This EFM gives an overview of the activities of 32 IFIs, and fiscal measures adopted in 26 EU member states and the UK. The monitor is based on a survey among EU IFIs conducted in January and February 2021, and is largely based on information in autumn 2020 government budgets.

This paper takes stock of the emerging public finance landscape in the (post-)crisis environment. It explores 10-year scenarios for economic growth and public finances in several EU countries, and discusses their implications for fiscal sustainability

This paper will assess the characteristics and pre-conditions of the effective medium-term frameworks in the EU, drawing from national experiences. This contribution is particularly relevant in the context of the Recovery and Resilience Facility since its implementation is expected to result in a significant increase in investment projects over the next three years

Weakened growth along with automatic stabilisers and additional fiscal stimulus are leading to higher public debt levels as a result of the Covid-19 pandemic.

This issue of the European Fiscal Monitor gives an overview of the activities of EU IFIs and fiscal measures adopted in the 24 EU member states and the UK up to September 2020.

Read the Special edition of Fiscal Monitor when facing Covid-19.

Read the Special edition of Fiscal Monitor when facing Covid-19.

Paper on Potential Output and the Output Gap estimates

The member institutions of the Network of EU IFIs share the view that it is time to ensure that the role of IFIs is further strengthened within the EU and national fiscal frameworks, and the Network proposes EU action to reinforce and protect IFIs.

The Network of EU Independent Fiscal Institutions (EU IFIs) endorsed the Report "Medium-term budgetary frameworks: A contribution on definitions and identification of good practices" in its meeting held in Rome on the 4th of May 2018.

The Network of EU Independent Fiscal Institutions (EU IFIs) endorsed this Report at its meeting held in Rome on the 4th of May 2018.

In reply to the statement by the network of EU Independent Fiscal Institutions on the recent developments concerning the Danish Economic Council the Ministry for Economic Affairs and the Interior can confirm that the Danish Government has decided that the secretariat which serves the Danish Economic Councils should be relocated to Horsens.

In a statement, the Network of EU IFIs expresses deep concerns about the recent news on the Danish government’s decision to relocate the Danish Economic Council away from the Copenhagen area.

In a statement responding to the EU Commission’s proposal for a Council Directive implementing the Fiscal Compact into EU law, the Network of EU Independent Fiscal Institutions (IFIs) welcomed the proposal as a right step forward towards the consolidation of national IFIs as key institutions to promote responsible fiscal policies at the national level.

On 7 November 2017, members of the Network of EU IFIs agreed to re-new the leadership structure of the Network

The Network of EU IFIs met in Paris on 2 November. Let me convey the views of its members on the outcome of the appointment process of the members of the European Fiscal Board (EFB).

In this document, we propose the idea of a Memorandum of Understanding (MoU) between the European Commission and the EU IFIs, along the lines of those that many IFIs have with their national agencies. Its purpose would be to codify the information flow between the Commission and the EU IFIs.

The Network of EUIFIs held a 1-day workshop on medium-term budgetary frameworks in the EU member states - current practices in the EU, consequences for IFIs and considerations how to improve them further Subsequently, the Network prepared the following paper summarizing its position.

One of the most salient novelties of the recent reforms of the EU fiscal framework has been the decision to promote the establishment of Independent Fiscal Institutions (IFIs). As stated in the Network of EU Independent Fiscal Institutions position paper of 5 November 2015, in order for the EU fiscal framework to function effectively, it is highly desirable to ensure that the IFIs are strong enough to fulfill their functions.

On 11 September 2015, representatives of independent fiscal institutions operating in the EU agreed on the establishment of the Network of EU Independent Fiscal Institutions

The Network of EU Independent Fiscal Institutions (IFIs) has examined the report on Completing Europe’s Economic and Monetary Union (henceforth referred to as the Five Presidents’ Report), the October Commission package to begin the implementation of the plans to deepen the EMU, in particular the Commission Decision establishing an independent advisory European Fiscal Board (EFB), and reflected on these initiatives to work towards an integrated framework for sound fiscal policies. See the full text of the position paper for more information.