Memo: Preparation of Eurogroup and Economic and Finance Ministers Council, Luxembourg, 8 and 9 June 2009

As is usual at this time of the year, Eurogroup ministers discussed common budgetary orientations ahead of the preparation of the national budgets for 2010, the so-called Mid-term Budgetary Review. The discussions took a particular significance this year in view of the necessity to balance the needs for stabilisation of the economy and sustainability of public finances. According to the Commission's spring forecasts, the euro area is expected to record an average deficit of 5.3% this year and, under unchanged policies, -6.5% in 2010 from near balance (-0.6%) in 2007. EU heads of government stated their strong commitment, including at the last European Council, to sound public finances and to the Stability and Growth Pact framework. They agreed national budgets should return to positions consistent with sustainable public finances as soon as the economy recovers. The G20 London Summit also stated leaders' resolve to ensure long-term fiscal sustainability and price stability and to put in place credible exit strategies from the measures needed to support the financial sector and global demand. The fall in euro area (and EU) GDP is set to level off towards the end of the year, according to the Commission forecasts, to be followed by a gradual economic during the course of 2010.

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