On Wednesday 22 October, the European Fiscal Board (EFB) drew up a mixed assessment of the transition to the revised Stability and Growth Pact in 2024, a period during which the European Commission is said to have relaxed its focus on fiscal surveillance.
The application of the revised Stability Pact "could have got off to a better start", the Chair of the EFB, Pieter Hasekamp, told some journalists.
Although the European fiscal rules applicable in 2024 were those of the ‘old’ Pact,” the EU stopped monitoring implementation in spring 2024, shifting attention to the roll-out of the new fiscal framework”. “This gave rise to a surveillance gap and deviations from Council recommendations carried no procedural consequences”, notes the EFB in its annual report.
This surveillance vacuum has had a dilatory impact on the monitoring of Member States’ excessive deficits. Contrary to the fiscal rules, the Commission separately issued its diagnosis of the existence of an excessive deficit in seven EU countries (see EUROPE 13449/17) and its recommendations for eliminating these deficits (see EUROPE 13449/17), in particular to bring these recommendations into line with the 2025 budgets and the trajectory of the multi-annual budget programmes of the countries concerned.
The cases of Austria and Spain are also highlighted. According to the European Fiscal Board, the opening of the excessive deficit procedure (EDP) for Austria should have taken place well before July 2025 (see EUROPE 136776/23). Similarly, the Commission’s decision not to open an EDP procedure for Spain, on the grounds that such an approach “would not serve a useful purpose”, is questionable.
In the end, Member States chose to “channel revenue windfalls and the phasing out of energy support measures into expanding current discretionary spending rather than pursuing further fiscal consolidation", criticises the EFB.
Opacity. Mr Hasekamp also pointed to the “reduced transparency” of the transition phase to the revised Stability Pact. In his view, the negotiations between the Commission and the Member States on the multi-annual budget programmes have excluded other stakeholders, such as the “independent fiscal institutions”.
“The recourse to bilateral solutions clearly runs counter to the multilateral process” guaranteed by the Pact, said Mr Hasekamp.
To see the European Fiscal Board report: https://aeur.eu/f/j3m (Original version in French by Mathieu Bion)