Euro zone finance ministers have agreed to spend more “where possible” to counter the single currency area’s economic slowdown and rising downside risks to the economic outlook, their chairman Mario Centeno said on Thursday.
The vague declaration follows calls from the European Central Bank (ECB) last month for euro zone governments to use fiscal policy to boost growth since monetary policy alone will not suffice.
Centeno said the ministers agreed to closely co-ordinate policies in case downside risks to growth materialised.
Such risks include a no-deal Brexit, heightened trade tensions between the United States and China, potential tariffs on European cars exported to the U.S. as well as geopolitical tensions.
“We agreed that if there is a more marked downturn, we should not tighten our policies and make it worse. Where possible, our fiscal stance should be more accommodative,” he said.
The pressure to spend more is mainly on Germany and the Netherlands, because both have been running budget surpluses for years. Germany is in need of large investments but is also keen to reduce its debt that this year is to fall below 60 per cent of GDP.
German and Dutch finance ministers said on Wednesday their countries were already spending more.