The European Parliament’s Committee on Economic and Monetary Affairs voted, on the evening of Monday 11 December, on the reform of the Stability and Growth Pact.
A majority of MEPs from the EPP, S&D and Renew Europe groups adopted all the compromise amendments previously negotiated and revealed by EUROPE (see EUROPE 13311/22). But the parliamentary committee has reserved adoption of its negotiating mandate for the January plenary session, European Parliament co-rapporteur Margarida Marques (S&D, Portuguese) told EUROPE on Tuesday 12 December.
MEPs recommend introducing a quantitative criterion for public debt reduction that will vary according to a Member State’s level of public debt: an average annual reduction of 1% of GDP for countries whose debt exceeds 90% of GDP over the adjustment period (between 4 and 7 years covering the duration of the national macro-budget plan + 10 years), or an average annual reduction of 0.5% for countries whose debt is between 60 and 90% of GDP. This provision is identical to the one adopted by the Member States (see EUROPE 13308/1).
However, unlike the Member States, MEPs are not introducing a common numerical criterion aimed at bringing the public deficit sufficiently below the Maastricht threshold of 3% of GDP.
In the ‘preventive’ part of the Pact, MEPs consider that a Member State will not respect its net budgetary expenditure trajectory if the cumulative expenditure recorded in the control account exceeds 1% of GDP over the adjustment period, excluding the years of recession. By way of derogation from this new provision, the Commission may exceptionally authorise a Member State to exceed the limit set, for a maximum of five years, in order to take account of certain strategic investments offering added value for the Union as a whole.
We want to “strike a balance” between sound budgetary positions and giving Member States sufficient room for manoeuvre to invest in the EU’s political priorities, said Ms Marques. “For the S&D group, a key point is the opposition to the introduction of additional numerical criteria for deficit reduction”, she added.
And, in the event of a major investment, the European Commission will have to take this into account before initiating an Excessive Deficit Procedure (EDP) on the basis of debt, even though this investment will still be recorded as expenditure in the control mechanism.
Another way of supporting investment, according to the parliamentary committee, will be to exclude net budgetary expenditure: - national co-financing for projects financed by European funds, up to a ceiling of 0.25% of a Member State's GDP; - interest on loans from the post-Covid-19 European Recovery Plan, Next Generation EU; - certain unemployment insurance expenses.
Ms Marques also advocated the creation of a “European fund” to support investment as an extension of the European Recovery Plan. In her view, this European fund should already be included in the revision of the 2021-2027 Multiannual Financial Framework, which is on the agenda of the European Council. Positions are not unanimous within the S&D group. French Socialist Aurore Lalucq said, on Tuesday 12 December, that she had voted against the amended draft reports, considering that the European Parliament’s position was “stricter” than that of the Commission’s and “based too much on the EU Council's proposal”.
The co-president of The Left group, France’s Manon Aubry, denounced “one of the worst social massacres” to come if the reform is applied as it stands, while European trade unions protested against the return of austerity in Brussels on Tuesday. According to Stéphanie Yon-Courtin (Renew Europe, French), the position approved by the MEPs “abandons an automatic and uniform model in favour of a more nuanced approach, taking into account the specific characteristics of each Member State (...)while maintaining a balance within the EU to avoid excessive disparities”, she added in a press release.
Click on the links to see the ECON Committee’s compromise amendments on the ‘preventive’ – https://aeur.eu/f/a2x – and ‘corrective’ – https://aeur.eu/f/a2y – aspects of the Stability and Growth Pact and on national budgetary frameworks – https://aeur.eu/f/a2z (Original version in French by Mathieu Bion with the editorial stuff)