European Investment Stabilisation Function

Press release: EESC gives European Parliament, Commission and Council fresh input for improving economic governance in the EU

Key points:

The EESC

• notes that the proposed EISF aims to make national fiscal policies more stabilising with respect to asymmetric shocks;
• considers this as a step towards closer euro area integration and possibly an attempt to encourage non-euro Member States to join the single currency;
• has concerns about the size of the fund in the event that asymmetric shocks affect two or more Member States;
• notes that having unemployment as the sole criterion to activate support may lead to some deficiencies with regard to the timeliness of the stabilisation function;
• therefore suggests other complementary indicators which normally precede unemployment in terms of predicting an impending large shock, in a way that an initial level of support can be triggered before the "large" shock is fully transmitted to the unemployment indicator;
• advocates that a balance be struck between the Commission's oversight on one side and, on the other hand, the concerned Member State's discretion in determining the type of investment required;
• is of the view that a well-crafted union-wide insurance scheme that acts as an automatic stabiliser amidst macroeconomic shocks would be more effective than the proposed EISF;
• urges the Commission to investigate how such an insurance mechanism could operate across the EU;
• advocates a coordinated approach to deploy all relevant financial instruments, including the EISF, in case another financial and economic crisis hit the EU.