European Economic Policy 2023

Throughout 2023, both the EU and the euro area recorded weak economic growth only. Nevertheless, the labour market remained robust – unemployment in the euro area remained at its lowest level since the introduction of the euro throughout 2023. The European Central Bank continued to tighten monetary policy in 2023 in order to curb inflation. The consolidated balance sheet of the Eurosystem fell significantly in 2023 and for the first time on a large scale since the start of quantitative easing in 2015. Fiscal policy remained expansionary in most EU countries, but countries began to gradually reduce their budget deficits. Progress in the implementation of the Recovery and Resilience Facility (RRF) slowed considerably in 2023, indicating considerable difficulties in implementation. After years of discussions, the reform of the European fiscal policy framework was agreed among the member countries in 2023. The new focus on industrial policy is putting pressure on the integrity of the single market by relaxing state aid rules.