What is the Commission presenting today? The Communication outlines the Commission's orientations for a reform of the economic governance framework, addressing challenges prevailing now and over the foreseeable future.
- What are the main elements of the Communication?
The Commission's orientations seek to create a more transparent,
simpler and integrated architecture for macro-fiscal surveillance to
better deliver on the objectives of ensuring debt sustainability and
promoting sustainable growth.
The central elements of these orientations are:
- National medium-term fiscal-structural plans that bring together fiscal, reform and investment policies of each Member State, within a common EU framework;
- Greater national ownership and better enforcement of the Council-endorsed fiscal-structural plans, as a counterpart of increased ownership of those paths by Member States;
- A more effective framework to detect and correct macroeconomic imbalances; and
- A more focused and streamlined post-programme surveillance framework, the framework assessing the repayment capacity of Member States having benefited from financial assistance programmes.
- Why is the Commission presenting this Communication now?
Sound public finances that respond in a coordinated manner to the
prevailing challenges and that help achieve common EU priorities have
become increasingly important in the face of recent and current crises.
This Communication responds to the need for a reformed framework that is
fit for the challenges of this decade. Swift agreement on revising the
EU economic governance framework would provide further evidence of the
institutional robustness of the euro area, which rests on sustainable
public finances and on preventing and addressing macroeconomic
imbalances in all Member States and in the EU and the euro area as a
whole. The operation of credible fiscal rules and surveillance of risks
to macro-financial stability will also help the European Central Bank
attain its goals, particularly as it faces the challenge of delivering
on its mandate to maintain price stability while avoiding financial
fragmentation in the euro area.
Reaching an agreement on the future of the economic governance
framework is a pressing priority. The extension of the general escape
clause until 2024 will provide Member States with the necessary
flexibility to react quickly and effectively to the consequences of
Russia's invasion of Ukraine and the current economic situation. At the
same time, Member States and the Commission should reach a consensus on
the reform of the economic governance framework ahead of Member States'
budgetary processes for 2024.
- Is the Commission recommending any legal changes to the
Stability and Growth Pact and/or changes to the Treaty, i.e. the 3% of
GDP deficit and 60% of GDP debt reference values?
In the Commission's view, a thorough reform of the EU economic
governance framework will require legislative changes, but changes to
the Treaty will not be necessary. The Commission will consider tabling
legislative proposals on the basis of the Communication presented today
and the ensuing discussions.
- How are the findings of the public debate on the review of
the EU's economic governance framework reflected in this Communication?
The Commission relaunched an important discussion on the future of
the economic governance framework almost one year ago. Since then, an
open and rich public debate has taken place, with contributions from
citizens, EU institutions, national governments and a range of other
stakeholders. The Commission has also engaged in useful technical
discussions with Member States.
Today's Communication builds on the elements of convergence that have emerged during these consultations.
- How has the COVID-19 pandemic influenced the Commission's thinking on how to reform the economic governance framework?
Lessons learned from the successful EU policy response to the
COVID-19 crisis, including the Recovery and Resilience Facility, have
informed the review of the economic governance framework.
For example, Member States provided sizeable fiscal support in
response to the COVID-19 crisis that, together with EU-level measures
and instruments, and social safety nets and health systems at the
national level, helped to mitigate the economic damage of the crisis.
This has underlined the need for fiscal policy to act in a
counter-cyclical manner, both in supporting the economy during crises
and building up fiscal buffers in periods of economic growth. Investment
in preparedness and resilience can also reduce the adverse economic
impact of crises.
At the same time, the pandemic resulted in a significant increase in
public and private sector debt ratios, underscoring the importance of
reducing debt to prudent levels in a gradual, sustained and
growth-friendly manner.
The crisis also confirmed that effective policy coordination is
critical, including between different policy and funding tools, and
between the EU and national levels.
- How have lessons learned from the operation of the Recovery and Resilience Facility fed into this Communication?
Lessons learned from the set-up of the Recovery and Resilience
Facility (RRF) have provided the Commission with inspiration for the
orientations presented today.
In particular, the Commission has drawn insights from the RRF's
commitment-based approach to policy coordination, with strong national
ownership of policy design and outcomes, based on upfront guidance to
Member States on investment and reform priorities....
more at European Commission
© European Commission
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article