MNI: Eurozone To Urge Slightly More Fiscal Expansion - Sources

Eurozone finance ministers are set to declare that the single currency area’s appropriate fiscal stance should be "neutral to mildly expansionary" for the next budgeting round, versus “broadly neutral” for 2026, European Union officials told MNI.

In a statement to be issued after Thursday’s meeting in Brussels, which will set the tone for the autumn round of national 2027 draft budget plans, the Eurogroup will also cite the need for many countries to further boost spending on defence and infrastructure, while insisting on fiscal consolidation in high-debt countries, officials said.

At the meeting, ministers from so-called “frugal” states, as well as France, are likely to raise concerns about the European Commission proposal, which followed pressure from Italy, to allow slightly more flexibility in fiscal rules for energy spending.

It remains unclear whether even Italy will even apply for the additional flexibility, given that is conditional on extra spending’s being limited to 0.3% of GDP and included within the additional 1.5% leeway already granted for increasing defence spending, sources said.

 Italy has yet to apply for the National Escape Clause for defence, something it would need to do in order to qualify for any further flexibility on energy spending. 

The cease-fire in the Gulf and subsequent fall back in oil and gas prices have eased pressure on Italy to boost energy support measures, while the Commission has insisted that any additional spending must be confined to projects which boost Europe's long-term energy security rather than on short-term help for consumers and businesses. (See MNI SOURCES: Cheaper Oil Gives ECB Room Before Next Hike)