Following the reform of the European economic governance framework, Member States will be able to benefit from differentiated public debt reduction paths, but their fiscal performance will have to be assessed according to the “same standards” and “common criteria” that do not lead to differential treatment, said the European Parliament’s Committee on Economic and Monetary Affairs (ECON) in adopting the draft ‘Tinagli’ report on Wednesday 1 March (44 votes in favour, 6 against, no abstentions).
“Debt reduction should be delivered in a growth-friendly way and (...) that underlying regulatory criteria should be defined in relation to Member States’ output and expenditure growth”, MEPs stress, according to compromise amendments of which EUROPE received a copy.
The committee welcomes the broad lines of the reform of the fiscal rules that the European Commission had identified at the end of 2022 (see EUROPE 13060/1): - simplification of the regulatory framework based on a single expenditure indicator (‘net primary expenditure’) designed to ensure the sustainability of public debt; - increased ownership of budgetary trajectories at national level.
“Enhanced flexibility for Member States goes hand in hand with greater responsibility” to implement investments and reforms effectively and quickly, say MEPs. They believe that the legislative reform, in which they want to be closely involved, needs to be completed before the end of the current legislature, if possible before the ‘unfreezing’ of the Stability and Growth Pact, scheduled for the end of 2023.
It should be noted that the European Parliament also wants to ensure that there are no more contradictions between the procedure on macroeconomic imbalances and the fiscal rules, for example when the correction of imbalances requires investments that could be limited by the budgetary rules.
The committee does not call for the creation of a fiscal stabilisation function for the euro area, noting only that the Commission itself does not identify an appropriate mechanism to ensure that the fiscal stance observed at the euro area level reflects that of the one initially recommended.
Nevertheless, on the subject of European financial solidarity instruments, MEPs call on the Commission to build on the experience of the SURE initiative to support national unemployment insurance schemes, activated during the Covid-19 pandemic, to deal with “those crisis situations where temporary national schemes lack sufficient resources”. And the report reiterates the European Parliament’s position in favour of the creation of a European Sovereignty Fund.
After a first discussion in February (see EUROPE 13121/3), the Ecofin Council will continue its discussions on the reform of the European economic governance framework on Tuesday 14 March.
See the compromise amendments: https://aeur.eu/f/5kl (Original version in French by Mathieu Bion)