The European Commission will present its proposal to reform the European economic governance framework on Wednesday 26 April, despite intense pressure from Germany in recent days to delay the initiative if it does not sufficiently tighten the common rules on public finance consolidation.
In broad terms, the legislative package - amendments to Regulation 1466/97 on the preventive arm of the Stability and Growth Pact, Regulation 1467/97 on the corrective arm of the Pact and Regulation 2011/85 on Member States’ budgetary frameworks - will take up the main principles set out by the EU institution in its November 2022 Communication (see EUROPE 13060/1).
The College of Commissioners will endorse the idea that Member States should draw up macro-fiscal plans covering a period of 4 to 7 years during which their public finances should conform to a path of gradual reduction of excessive public debt or, for low-debt countries, maintain a prudent fiscal policy. In these plans, Member States would detail the level of their public expenditure through a single indicator called the ‘net primary expenditure’, as well as the structural reforms and investments in climate and digital transitions they intend to undertake to increase their growth potential.
The objective of the reform of the Stability Pact is to facilitate Member States’ ownership of the European fiscal rules by providing for differentiated budgetary paths according to the specificities of each country.
According to our information, the German will to impose a common criterion of an annual reduction of 1% of the public debt has not been retained. But the legislative package would still provide for a more stringent adjustment variable than the Commission had initially envisaged.
New sanctions for breaches of the rules would be more automatic, but less onerous financially, as the current sanctions have never been imposed.
The idea of exempting from the calculation of the deficit the expenditure related to short-time working in times of economic crisis and the national co-financing of projects financially supported at European level should not be taken up.
The Commission wants the legislative package to be presented before the departure of Marco Buti, head of the cabinet of the European Commissioner for the Economy, Paolo Gentiloni, and a few days before the informal meeting of EU finance ministers on Friday 28 and Saturday 29 April in Stockholm. This issue is not on the agenda of this meeting, but is expected to be discussed in the margins, as the Swedish Presidency of the EU Council wants to focus on longer-term economic issues.
The aim of the Member States is to reach an Interinstitutional Agreement with the European Parliament on this reform before the end of the current legislature. (Original version in French by Mathieu Bion)