New economic governance rules fit for the future

Background:

The EESC will provide essential recommendations regarding the Commission's proposed reform of the EU's economic governance. While the EESC appreciates the aim of simplifying the framework, it advocates for certain adjustments. These include pushing for greater flexibility regarding budget deficit adjustments, opposing automatic sanctions linked to debt levels, and proposing a distinct evaluation of public investment in green and defense sectors. Additionally, the EESC suggests expanding the definition of public investment, establishing an EU fiscal capacity by 2026, and enhancing participation from social partners, civil society, and parliaments to improve democratic accountability.

Key points:

In the opinion, the EESC

• recommends replacing the rigid requirement for Member States with deficits over 3% to cut their deficit by 0.5% of GDP annually. It also opposes automatic sanctions based on debt ratios. Additionally, the EESC suggest that, in order to strengthen national ownership, the "technical trajectory" should first in the hand of national governments, with input from independent fiscal bodies, and later discussed with the European Commission;
• recommends treating public investments related to the green transition and defence separately when assessing excessive deficits. The EESC also propose broadening the definition of public investment to include natural and human capital, enabling investments in green and social goals. Furthermore, the Committee suggest creating an EU fiscal capacity by 2026 to fund common priorities and support Member States with fiscal costs related to the twin transitions, which would not qualify as investment;
• emphasizes involving social partners and civil society in the proposed regulation through permanent and structured consultations. The EESC suggests including the EESC and CoR in the "Semester dialogue" and underline the role of both national and European Parliaments in enhancing democratic accountability within the EU economic governance framework;

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Additional information:

- EESC section: Economic and Monetary Union and Economic and Social Cohesion (ECO)
- opinion type: Optional Opinion
- rapporteur: Javier DOZ ORRIT (Workers - GR II / Spain)
- co-rapporteur: Luca JAHIER (Diversity Europe - GR III/Italy)
- reference: ECO/622-EESC-2023
- referral: COM(2023) 240 final 2023/0138 CODCOM(2023) 240 final 2023/0138 CODCOM(2023) 241 final 2023/0137 CNS
- date of adoption by section: 8/09/2023
- date of adoption in plenary: 20-21/09/2023

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