The European Parliament’s Committee on Economic and Monetary Affairs (ECON) adopted its position on Monday 21 June (38 votes in favour, 6 against, 12 abstentions) on the European economic governance framework in the light of the experience of the Covid-19 pandemic, approving all the compromise amendments to the draft report by Margarida Marques (see EUROPE 12677/11).
MEPs welcome the use of the general escape clause in the Stability and Growth Pact in spring 2020, an unprecedented initiative which has helped to minimise the economic and social impact of the pandemic. They approve the continuation of the derogation clause until the end of 2022. As the recovery begins to take hold, public fiscal support should be gradually eased and more targeted to the most affected sectors of activity, they say, with the fiscal stance at the aggregate level remaining “expansionary”, as recommended by the Eurogroup.
The committee calls for a revision of the EU fiscal rules, which should—preferably—be in place by the time the general escape clause is deactivated. If this is not the case, the case-by-case use of all the Pact’s flexibilities, such as the ‘unusual event clause’, will avoid premature budgetary consolidation and limit the extent of “scarring” from the pandemic.
“If we look at the timetable, it will be impossible to have revised rules before the general escape clause of the Pact is deactivated. It is important that it is clear at this point that the specific situation of each Member State will be taken into account”, Ms Marques qualified, speaking to EUROPE.
In order to deal sustainably with the high level of public debt exacerbated by the health crisis, MEPs draw on the recommendations of the European Fiscal Board on the reform of the Pact (see EUROPE 12585/22). This would introduce an ‘expenditure rule’ with a ceiling when a country’s public debt exceeds a certain threshold, which would be applied in a differentiated manner across Member States.
The Commission is invited to carry out an analysis of the sustainability of Member States’ public debts.
Stressing that it is important for the European Parliament to state its position before the Commission relaunches the reflection on the evolution of the European fiscal rules “in the autumn”, Ms Marques said it was necessary to discuss how the rules should behave to promote investment.
According to an agreed compromise amendment, the European economic governance framework should be revised to “[make public] debt rules simpler, enforceability better and designed to support long-term economic growth, with appropriate public and private investment”.
No exclusion from the Pact for certain expenses
However, the committee does not explicitly support the exclusion of certain social and/or environmental expenditure from the calculation of public expenditure, notably to contribute to the climate and digital transitions. It merely notes the favourable position of the European Board in this respect.
“We are not proposing to change the treaties”, said Ms Marques.
A targeted exclusion of certain expenditures and investments from the fiscal rules is traditionally supported by groups on the left of the political spectrum.
According to one source, the caution underlying the whole draft report is due to the recent hardening of the EPP group’s position in the ECON Committee after the rejection of the ‘Gruffat’ report on sustainable taxation in early June, notably by coordinator Markus Ferber (EPP, Germany) in the run-up to the German parliamentary elections (see EUROPE 12733/14).
The ‘Marques’ report is expected to be put to the vote at the July plenary session of the European Parliament.
See the amendments to the draft report: https://bit.ly/2SOarvW
See the compromise amendments: https://bit.ly/3h5tESf (Original version in French by Mathieu Bion)