EU finance ministers agreed on Tuesday 14 March on conclusions setting out converging positions, and others requiring further work, on a European economic governance framework whose future legislative reform they say should be completed by the end of 2023 (see EUROPE 13135/14).
“I am very pleased that we have reached an agreement on the conclusions of the EU Council”, said Swedish Minister Elisabeth Svantesson, emphasising the spirit of compromise around the table. She called for a balance between the pursuit of sound public finances and rules that support reform and investment.
The President-in-Office of the Ecofin Council listed some of the principles that will underpin the forthcoming legislative reform: - the maintenance of the maximum thresholds of 3% of the deficit, and 60% of the public debt, enshrined in the Treaties; - a more tailored approach to the specificity of Member States in setting their public finance consolidation path; - the development of national multi-annual plans setting out fiscal policies, investments and reforms to be carried out over a period of from four to seven years. The conclusions also refer to the search for ownership of the budgetary adjustment by the Member States and the possibility of imposing smaller, but more automatic, financial and reputational sanctions on Member States in breach.
The adoption of the conclusions, which enable the EU Council to send a message of unity, is “not the end of the journey”, noted Ms Svantesson.
A number of elements listed will need to be further developed, including the definition of overall expenditure, common quantitative benchmarks, the principles of an extended budgetary path, monitoring of the implementation of national plans or the incentives for reforms and investment.
French Finance Minister Bruno Le Maire said his country had made “necessary concessions” to reach a consensus on the text, citing common quantitative benchmarks and the fact that the multi-annual budgetary trajectory desired by member states will be compared with that to be prepared by the Commission on the basis of common rules.
While the draft conclusions had not even been discussed last week at the level of the Member States’ ambassadors to the EU (see EUROPE 13137/7), Germany asked for the text to be reopened, raising fears among other delegations that Berlin would backtrack on some of the main principles of the future reform of the Stability and Growth Pact.
The German authorities did not like the fact that the European Commission, in its 2024 budget guidelines, announced that it would apply in advance some elements of the forthcoming reform, such as the net primary expenditure and the differentiation of budgetary paths based on the specific challenges of each national debt level (see EUROPE 13137/6).
In our guidelines, we will take on board “those elements that are consistent with the existing legal framework”, justified the Commission’s Executive Vice-President Valdis Dombrovskis.
Berlin therefore insisted on amending the last paragraph of the text of the conclusions to strengthen the provisions requiring the Commission to continue preparatory discussions with the Member States.
“The discussions of the last few days have shown that some Member States - or rather a considerable number of them - fear that their remarks and concerns and their particular situation will not be sufficiently taken into account”, said German Minister Christian Lindner, underlining Germany’s “particular responsibility” for the stability of public finances. He stressed that the Ecofin Council conclusions do not give the European Commission “carte blanche”, as work must continue to gain the support of all Member States. He warns that: “The train can only leave the station if its destination is clear”.
However, Mr Lindner said that the German position on this issue was not comparable with the refusal to validate the Interinstitutional Agreement to end the sale of new cars and vans with internal combustion engines by 2035 (see other news).
Finland also expressed some unease about the Commission’s budgetary guidelines. “The problem is that these guidelines are also based on rules that we have not yet adopted”, said its minister, Annika Sarikko. The day before, at the Eurogroup, Mr Lindner reportedly threatened to refer the matter to the EU Council’s legal service.
Admitting there was “a bit of irritation” from some Member States on the Commission’s 2024 budget guidelines, Ms Svantesson stressed the importance of close cooperation with Member States.
Mr Dombrovskis agreed, in particular on moving forward quickly in the legislative process. He confirmed that the Commission would present its legislative proposal shortly after the European Council on Thursday 23 and Friday 24 March. Again at the request of Germany, the EU legislator should strive to complete the reform by the end of 2023.
See the conclusions of the Ecofin Council: https://aeur.eu/f/5rr (Original version in French by Mathieu Bion)