On Thursday 9 November, European ministers will attempt to reconcile their positions on the reform of the European economic governance framework, even though a political agreement in principle at the Council of the European Union is not expected before December.
According to several diplomatic sources, negotiations at technical and political level have made progress since the October Ecofin Council (see EUROPE 13273/13). The Spanish Presidency of the EU Council has consulted widely with national delegations. It has refined its proposals in documents (‘landing zones’) designed to bring the positions of the Member States closer together. If the most recent document (expected on Wednesday) meets with political support, a comprehensive compromise legislative proposal should be drawn up, with a view to reaching a political agreement at the December Ecofin Council.
Basically, a consensus seems to be emerging on the principle of introducing quantitative criteria (safeguards’’) into future European fiscal rules, requiring a reduction in public debt averaged over several years. It is not yet clear whether these provisions will apply when the future rules come into force in 2025 or at the end of the first budgetary and macroeconomic programme (lasting between 4 and 7 years) that a Member State implements to consolidate its public finances, carry out reforms or invest in the climate and digital transitions.
As far as deficit reduction is concerned, it seems certain that the future Stability and Growth Pact will require Member States to reduce their deficits below the maximum threshold of 3% of GDP enshrined in EU law. Germany’s request, supported by the countries of Northern Europe, has therefore been heard.
On both public debt and public deficit, the Member States have yet to agree on the numerical calibration of the budgetary effort required. Such a decision will only be taken at the last moment.
In return for these provisions aimed at putting public finances on a sounder footing, the Member States would appear to be converging on provisions that allow greater account to be taken of the reforms and investments contained in the current post-Covid-19 national recovery plans in order to increase their budgetary room for manoeuvre by extending the duration of their macroeconomic programmes.
In addition, defence-related expenditure will constitute ‘relevant factors’ that a State will be able to put forward to explain why it may have deviated from its budgetary trajectory and avoid the opening of an infringement procedure of the fiscal rules. And it will first be up to the Member States to propose their multiannual budgetary trajectory, which they will compare with the one drawn up by the European Commission.
In this context, the ministers will debate the 2023 report of the ‘European Fiscal Board’ with its chairman, Niels Thygesen, which warns against excessive growth in Member States' net public spending in 2022 (see EUROPE 13264/24).
RRF. On Thursday, the Ecofin Council will approve without debate the revised post-Covid-19 recovery plans for Austria, Denmark, Sweden and Lithuania.
See the proposal for a Council Decision approving the revised Austrian plan: https://aeur.eu/f/9fv; and its annex: https://aeur.eu/f/9e6
See the proposal for a Council decision approving the revised Swedish plan: https://aeur.eu/f/9fw; and its annex: https://aeur.eu/f/9e8
See the proposal for a Council decision approving the revised Danish plan: https://aeur.eu/f/9fy; and its annex: https://aeur.eu/f/9e7
See the proposal for a Council Decision approving the revised Lithuanian plan: https://aeur.eu/f/9fz; and its annex: https://aeur.eu/f/9e9
Ukraine/Russia. The ministers will take stock of the socio-economic impact of Russia’s military aggression. They could raise the issue of European sanctions against Russia and its allies, as well as the mobilisation of profits generated by frozen Russian public assets in the EU, as the European Council has asked the Commission to present a specific legislative initiative (see EUROPE 13281/1).
Miscellaneous. The Ecofin Council will discuss how to improve the budgetary process of the European Semester with a view to the launch of the 2024 financial year at the end of November. It will also adopt conclusions on European statistics. (Original version in French by Mathieu Bion)