At the beginning of December, the experts from the Council of the European Union’s Economic and Financial Committee (EFC) finalised a revised Code of Conduct on implementing the Stability and Growth Pact as revised in 2024.
These guidelines focus on changes brought about by the revision of European fiscal rules. In particular, they specify the indicator that should enable the multi-annual trajectory for net primary expenditure to be monitored. A reporting system, developed by Eurostat, will also make it possible to identify the amount of national co-financing for investments supported by European funds, as such expenditure is excluded from the calculation of net primary expenditure.
The Code of Conduct also details the content expected of national plans, particularly information on the reforms and investments that a Member State commits to making in the medium term. Each EU country will have to explain the expected budgetary impact of these initiatives and how the national plan complies with the EU’s political priorities. Specific requirements apply to the content of plans paving the way for a longer period of fiscal consolidation.
Under the ‘corrective’ arm of the revised Stability and Growth Pact, a Member State’s expenditure trends will be monitored via a ‘control account’. Through a simulation exercise, the Code of Conduct sets out how this account will operate, observing any downward or upward deviations from the net-expenditure path. If expenditure thresholds are exceeded on an annual or cumulative basis, a Member State could be subject to the opening of an excessive deficit procedure (EDP).
Finally, the Code of Conduct outlines the procedure for an EDP in view of the revised Pact and how compliance with budgetary commitments made to consolidate public finances is monitored.
See the EFC Code of Conduct: https://aeur.eu/f/jxe (Original version in French by Mathieu Bion)