#Eurogroup, Agenda highlights

The Eurogroup 0f December 5th will discuss draft budgets of the euro area member states, will be briefed on the ongoing second review of the Greece’s economic adjustment programme and will adopt its work programme for the 1st half of 2017.

Meeting information

• Draft annotated Eurogroup agenda (morning), 5 December 2016
• Draft annotated Eurogroup agenda (afternoon), 5 December 2016

Budgetary plans and prospects

At its morning session, which starts at 10.30, the Eurogroup will discuss the euro area member states’ draft budgetary plans for 2017. It will also look into the budgetary situation and budgetary prospects in the euro area as a whole.

The discussion on draft budgetary plans will be based on the European Commission’s opinions on these plans, published on 16 November.

The Commission evaluated the plans’ compliance with the rules of the Stability and Growth Pact (SGP) and assigned them to one of the following three categories:

• compliant (Germany, Estonia, Luxembourg, Slovakia and the Netherlands)
• broadly compliant (France, Ireland, Latvia, Malta and Austria)
• at risk of non-compliance (Belgium, Cyprus, Finland, Italy, Lithuania, Portugal, Slovenia and Spain)

Ministers of the member states whose plans are considered to be at risk of non-compliance will be expected to explain how they intend to meet the SGP targets.

Greece’s draft budgetary plan is not being evaluated in this exercise because it is assessed separately, as part of Greece’s ongoing macroeconomic adjustment programme.

To ensure better coordination of national fiscal policies, the euro area member states have to submit their draft budgetary plans for the European Commission’s evaluation between 1 and 15 October each year.

• Commission communication on the euro area member states draft budgetary plans for 2017
• Draft budgetary plans of euro area member states

Greece

The Eurogroup will be briefed by the institutions on the state of play of the second review of the economic adjustment programme, following the review mission which took place mid-November.

Depending on the progress achieved in the context of the second review, the Eurogroup may return to the issue of debt-related measures and the IMF’s involvement in Greece’s programme.

The second review focuses on Greece’s budget for 2017, its medium-term fiscal strategy and the labour market reform.

• Timeline: the third economic adjustment programme for Greece

Eurogroup work programme

The Eurogroup will adopt its work programme for the first half of 2017.

Economic Sentiment in Cyprus declined in May

In May 2016, economic sentiment in Cyprus deteriorated as the Economic Sentiment Indicator (ESI-CypERC) declined by 2.4 points compared to April 2016 as a result of the worsening of business confidence in services and construction, and the weakening of consumer confidence. Research conducted by “The Economics Research Centre” (CypERC) of the University of Cyprus.

Summary

1. In May 2016, economic sentiment in Cyprus deteriorated as the Economic Sentiment Indicator (ESI – CypERC) declined by 2.4 points compared to April 2016 as a result of the worsening of business confidence in services and construction, and the weakening of consumer confidence. 
2. The Services Confidence Indicator fell due to firms’ less positive assessments of past business situation and demand as well as to more pessimistic views regarding firms’ turnover over the next three months. 
3. The Construction Confidence Indicator declined because of more negative assessments of order books and employment plans. 
4. The Consumer Confidence Indicator deteriorated as a result of (i) consumers’ more pessimistic views regarding the future financial situation of their household and the general economic situation in Cyprus, and (ii) a decline in the likelihood of saving over the next 12 months. 
5. The Retail Trade and Industry Confidence Indicators remained unchanged as the improvement in the assessments of recent trends was offset by a deterioration of firms’ expectations.

CypERC is an independent, non-profit organisation with the aim of promoting scientific knowledge in economics, especially in matters concerning Cyprus.