EU finance ministers will be asked on Tuesday 14 March to adopt conclusions setting out guidelines for reforming the EU economic governance framework.
According to a draft text sent to national delegations on Friday 3 March and based on the first round of discussions at the February Ecofin Council (see EUROPE 13121/3), the Member States agree with the outline of a reform as initially envisaged by the European Commission (see EUROPE 13060/1).
The underline the importance of: - developing medium-term multi-annual plans (the exact duration is not specified at this stage) detailing the budgetary and socio-economic policies of the Member States, including reforms and investments planned; - allowing for the modification of these plans to take account of national electoral cycles and the extension of their duration, if the State concerned commits itself to adopting additional reforms and investments that strengthen the sustainability of public finances; - simplifying the regulatory framework through the introduction of a single indicator related to public expenditure (‘net primary expenditures’); - differentiating the public debt reduction trajectories according to the different national starting points; - analysing national budgetary trajectories through a common, transparent and predictable methodology, including an analysis of the sustainability of public debt and the economic challenges a country is facing; - allowing for the coordinated monitoring of national fiscal policies at European level; - facilitating greater ownership of European fiscal rules at national level.
One of the new elements of the text, which has emerged from the ongoing discussions in the EU Council, concerns the development of rules to avoid delays in the implementation of reforms included in a national plan.
“Common safeguard provisions to ensure sufficient debt reduction and prevent back-loading of fiscal efforts should be explored”, says the draft conclusions prepared by the Swedish Presidency of the EU Council. It adds that the sanctions regime should be more effective, including through increased transparency, while no EU country has ever been sanctioned for deviating from the fiscal path agreed at EU level.
Furthermore, with reference to the general escape clause that has allowed the Stability Pact to be ‘frozen’ since the outbreak of the Covid-19 pandemic in the spring of 2020, a similar clause is envisaged in the event of an “exceptional circumstance” affecting only one country. With this mechanism, which would be based on a detailed common procedure giving the Council a decision-making role, a State would be allowed to deviate temporarily from the agreed fiscal path.
Finally, the procedure for macroeconomic imbalances should evolve so that it is able to detect emerging imbalances in Member States even earlier.
See the draft conclusions: https://aeur.eu/f/5ni (Original version in French by Mathieu Bion)