Eurozone to phase out energy support measures
Eurozone finance ministers decided to gradually phase out energy support measures in 2024 to reduce government deficits. This decision was emphasized during the Eurogroup meeting of finance ministers. The Cyprus government plans to end the reduced consumer tax on car fuel and the subsidy of electricity bills by the end of April 2024. A political agreement on reforming the EU’s economic governance framework was reached in February 2024, with optimism for its early adoption. Ministers provided a cautiously optimistic outlook for the euro area’s economy in 2025, citing a robust labour market and a downward inflation path. However, they acknowledged economic risks due to global uncertainty. The reformed framework aims at strengthening debt sustainability and promoting growth through structural reforms and investment. An overall slightly contractionary fiscal stance is expected in the euro area for 2025, focusing on priority areas like the green and digital transition and defence capabilities, with an emphasis on improving the efficiency, quality, and composition of public spending.