Economic governance review 2020

Key points:

The EESC

• welcomes this review and calls for a reform to establish a prosperity-focused economic governance, which focuses on a range of key policy objectives, such as sustainable and inclusive growth, full employment and decent work, and avoids asymmetric effects in the Member States;

• believes that after a future deactivation of the general escape clause of the Stability and Growth Pact, the best way forward would not be a “return to normal” but a “turn” to a revised and rebalanced economic governance framework as follows:

1. make public finances sustainable in the long run and eliminate macroeconomic imbalances by: acknowledging that economic difficulties make budget consolidation extremely difficult; prioritising sustainable and inclusive growth while being aware of fiscal multipliers; ensuring sufficient revenues by combating aggressive tax planning and tax fraud; implementing symmetrical indicators showing surpluses as well as deficits; placing more weight on employment and social development within the Macroeconomic Imbalance Procedure (MIP);
2. ensure that fiscal policies target both sustainability and short-term stabilisation by: strongly mitigating the influence of economically and technically questionable indicators; placing more weight on increasing revenue; conducting further analyses in the event of significant deviations;
3. bring about key reforms and stimulate sustainable investment by: applying the Golden Rule and safeguarding public assets to ensure future productivity and prosperity; implementing a strategic investment plan; making public support conditional on sustainable and social criteria;
4. put forward an economic governance framework based on solidarity with responsibility by: developing solutions together with the affected countries on an equal footing in the event of significant deviations; enhancing the role of the European Parliament; involving the social partners and civil society to a greater extent; making consultation of the EESC mandatory;
5. deepen the Economic and Monetary Union (EMU) in the following areas: implementing a stabilisation function in order to pursue a common countercyclical policy; combating the disastrous consequences of the COVID-19 crisis in a solidarity-based way; issuing long-term common debt accompanied by measures to distribute the tax burden fairly; deepening the banking and the capital market unions to further consolidate the single market by introducing effective regulation;

• calls for the pivotal question of how to adapt the TFEU's economic governance provisions to the EU's current economic reality to be debated at the upcoming conference on the future of Europe.