EESC: ANNUAL SUSTAINABLE GROWTH SURVEY 2024

After a strong recovery in 2022, the European economy has slowed due to high inflation and tighter financial conditions. Despite these challenges, it avoided a recession and continues to demonstrate resilience.

The expiration of the Stability and Growth Pact’s general escape clause at the end of 2023 marks a significant post-pandemic economic shift. This clause aimed to support monetary policy, curb inflation and ensure fiscal sustainability, while allowing for vital investments and growth.

The EU has notably reduced reliance on Russian fossil fuels, leading to decreased natural gas prices, however they are still above pre-crisis levels. Efforts to enhance energy resilience include transitioning to clean energy and revamping the EU’s electricity market.

The macroeconomic outlook presents significant risks that warrant careful monitoring. Despite avoiding a recession in 2023, and noting that the euro area GDP declined by 0.1 % in the third quarter of 2023, the projected growth rates of 0.6-1.7 % over 2023-2025 are modest. High inflation and tighter financing conditions, coupled with the erosion of purchasing power, could further dampen demand and growth prospects.

The European Central Bank (ECB) should closely monitor economic risks and carry out careful contingency planning to ensure credible inflation outlooks. The European Economic
and Social Committee advises the ECB to be prepared to adjust policies if the projected decline in inflation slows or reverses, or alternatively drifts too far below 2 %, thus advocating for clearer contingency planning.

The EESC calls for concrete engagement with national parliaments, regional and local authorities, civil society and social partners on reforms of the EU’s macroeconomic governance framework. It stresses the importance of taking ownership of these reforms at national level through effective dialogue.

Acknowledging the diverse economic conditions and growth challenges of Member States, the EESC advocates for fiscal consolidation that takes into account each Member State’s unique situation.