New economic governance rules fit for the future

The EESC

• welcomes the simpler and more transparent economic governance framework, the reduction of the pro-cyclical bias, the improvement in national ownership and strengthened enforcement, the differentiation and more tailored fiscal adjustment path of each Member State, based on a common-risk framework;

• calls for a swift start to negotiations between co-legislators to achieve an agreement on the reforms before the end of the current year and on its implementation before next European elections as a solid, balanced, enforceable and predictable long-term framework is of upmost importance for the debt market too;

• proposes replacing the requirement obliging any Member State with a budget deficit of over 3% to cut that deficit by an average of 0.5% of GDP annually in all but exceptional circumstances, with something more adaptable to Member States' specific circumstances that should secure long term debt sustainability;

• calls for public investment – at least on the green transition and defence – to be treated separately when deciding whether any excessive deficit procedure should be opened to allow all Member States to undertake the public investment needed to address the common priorities;

• believes that in due course, and by 2026 at the latest, an EU fiscal capacity should be established to meet at least some of the investment needs for common priorities and to allow Member States the fiscal space to meet the fiscal costs of the multiple transitions which do not qualify as investment;

• calls for a definition of public investment to be adopted which expands the eligible non-current public expenditure beyond the formation of fixed capital so that it includes the formation of natural and human capital, allowing for public investment in green and social objectives;

• calls for further and in-depth scrutiny by the co-legislators, before the adoption of the new Regulation on the DSA methodology, to avoid any unintended automatic consequences arising from new austerity policies, in particular considering the social impact of the measures to be eventually foreseen;

• considers that sanctions under the Excessive Deficit Procedure should not be applied automatically, based on a division of countries into categories founded on public debt ratios;

• is convinced that the "technical trajectory" should be first in the hands of national governments, subject to the opinion of independent national fiscal bodies, and, at a second stage, be the result of a technical dialogue with the European Commission in order to strengthen national ownership of the process;

• reiterates its call for the social partners and civil society organisations to be involved in the proposed regulation, with an obligation for permanent and structured consultation procedures at the different stages of the new economic governance framework. The EESC and CoR should also be included in the "Semester dialogue";

• considers that national and the European Parliaments have a role to play in the EU economic governance framework, to strengthen democratic accountability.