In a report published on Thursday 5 March, the European Fiscal Board (EFB) warns that the European Commission was applying the rules of the Stability and Growth Pact in a manner that is too “mechanical” and does not take sufficient account of other macroeconomic factors.
The European Commission has adopted “a rather mechanical approach to examining the draft budget plans for 2026”, placing Member States in specific categories according to their compliance with the EU’s fiscal rules, according to the Chair of the EFB, Pieter Hasekamp.
In late November 2025, the EU institution deemed the Netherlands to be in a situation of serious non-compliance with the Pact (see EUROPE 13759/14), even though there was little risk of its public debt spiralling out of control in the short term, he noted.
Conversely, France’s public spending trajectory was judged to be in line with European fiscal rules, despite the French government’s political difficulties in getting its draft budget adopted.
“The recent fiscal loosening in the 2026 French budget raises doubts about whether compliance assessments systematically account for the credibility of measures announced”, the European Board highlights.
There are also doubts about the German multiannual budget programme. Berlin anticipates strong growth in public spending on defence and infrastructure over the first few years. “2026 will be crucial in determining whether the reforms are implemented”, noted the German economist Eckhard Janeba. In his view, the possibility of initiating an Excessive Deficit Procedure (EDP) hangs over the German government, even though the Commission does not consider such an initiative to be on the agenda.
Another example: Romania’s fiscal situation should have led to the opening of a procedure that could result in the suspension of European funds allocated to Bucharest, according to the EFB. The Romanian fiscal situation should have had “financial consequences”, said Mr Hasekamp.
Ultimately, according to the European Board, in its fiscal surveillance exercise, the European Commission should “more consistently take into account overall conditions of public finances and the credibility of announced measures, also through bringing back the (...) practice of releasing detailed country-specific assessment notes”.
Defence. The EFB also notes that several Member States are taking advantage of the activation of the Stability Pact’s escape clause, which is supposed to focus solely on increasing military spending, to increase their spending in other areas, such as the social sphere.
Mr Hasekamp reiterated the European Board’s doubts about the lack of targeting of expenditure linked to the escape clause. He invited the countries concerned to adapt their budgets to take account of both the long-term increase in military spending and the need to keep public finances under control, as the escape clause expires in 2029.
This could involve “increased taxation or spending cuts”, he noted. An extension of the escape clause beyond 2029 is not desirable so as not to make it a permanent instrument, he also replied to Agence Europe.
See the European Fiscal Board report: https://aeur.eu/f/l1a (Original version in French by Mathieu Bion)