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18 July 2013

DG ECFIN: 2013 Report on Public finances in EMU


The Report presents recent budgetary developments, describes advances in budgetary surveillance and proposes a new indicator of fiscal effort based on a narrative approach.

The Report presents recent budgetary developments, describes advances in budgetary surveillance and proposes a new indicator of fiscal effort based on a narrative approach.  It also shows the developments of health expenditures and the possibility of introducing cost-containing reforms that preserve high quality standards in the provision of health services.

Part I. Current developments and prospects Part I discusses the 2012 - 2013 developments in the implementation of fiscal surveillance. Since 2010 the Member States have implemented impressive fiscal efforts despite strong economic headwinds, which improved fiscal sustainability and allow slowing the pace of consolidation.

Part II. Evolving budgetary surveillance Part II looks at the latest steps taken to improve economic governance in the EU. Particular reference is given to the “Two Pack”, which provides the framework for the assessment of draft budgetary plans submitted by Member States in the euro area, and to the Medium-Term Budgetary Objectives.

Part III. Measuring the fiscal effort While the structural balance is a good indicator of fiscal stance, a new fiscal effort indicator - the Discretionary Fiscal Effort (DFE) - offers a useful complementary perspective. It focuses on the amount of measures effectively introduced on the revenue side and the difference between primary expenditure growth and medium-term potential on the expenditure side. This indicator shows that the size of fiscal efforts has been differentiated according to fiscal space. 

Part IV. Public expenditure on health: its growing importance, drivers and policy reforms to curb growth (p147 onwardsThere is still scope to improve the composition of consolidation and make it more growth-friendly, by reducing expenditures via the improved efficiency of public spending. Particular attention is given to the health expenditure, a sector where expenditures are projected to grow in the coming years and where cost-reducing reforms are possible while keeping a high level of services.

Full report



© European Commission


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