Economic governance review

Key points:

The European economic governance rules, conceived in crisis, played an important role in fiscal consolidation, economic policy coordination and the furtherance of fiscal integration. However, the EESC is concerned that the cost has been high in terms of growth and employment, largely due to the incomplete nature of economic governance in an economic and monetary union.

The quantitative easing measures now being embarked upon by the European Central Bank need to be matched by greater political initiatives by the Member States going beyond the Investment Plan for Europe.

Concrete mechanisms and instruments for well-designed economic policy coordination leading to convergence and solidarity should be established urgently. This process should not involve Treaty change in the first instance but the EESC is of the opinion that in the long term Treaty change will be required.

In the review of the Multiannual Financial Framework in 2016, there is a need to back urgent structural reforms with a common EU interest, including macroeconomic rebalancing, with some form of fiscal capacity such as the Convergence and Competitiveness Instrument.

The EESC is concerned that the structural balance, a non-observable variable based on theoretical and disputed calculations and prone to serious revisions, plays such a key role in the Excessive Deficit Procedure.

More focus should be placed on measures to increase GDP growth in order to reduce high debt/GDP ratios than on budgetary measures to reduce the annual deficit. The Commission should monitor not only the implementation of country-specific recommendations (CSRs) but also carry out an ex-post analysis of its recommendations in achieving an increase in output, growth and high-quality jobs.

The Committee welcomes the emphasis placed on the use of flexibility within the rules of the Stability and Growth Pact, but considers it a limited and partial measure.

A lack of implementation of CSRs could be countered by real involvement of civil society and the social partners in drawing up CSRs.

The Semester process should provide for a stronger role of the European Parliament and be more widely publicised by Member States and the Commission to ensure a better understanding by citizens.

Composition of the Study Group.

Administrator in charge : Alexander ALEXANDROV / Assistant : Danny VAN DER ELST

Related opinions

• ECO/357 – Completing EMU - the next European legislature (rapporteurs: Joost van Iersel and Carmelo Cedrone)
• ECO/348 - CCI/Major economic policy reforms (rapp.: Croughan)
• ECO/336 - Economic policies of the Member States whose currency is the euro (rapp.: Delapina)
• ECO/286 - Macroeconomic imbalances (rapp.: Palmieri)
• ECO/285 - Budgetary surveillance in the Euro area (rapp.: Farrugia)
• ECO/282 - Enhancing economic policy coordination (rapp.: Palmieri)

Related documents

Regulation (EU) No 1173/2011 of the European Parliament and of the Council of 16 November 2011 on the effective enforcement of budgetary surveillance in the euro area

Regulation (EU) No 1174/2011 of the European Parliament and of the Council of 16 November 2011 on enforcement measures to correct excessive macroeconomic imbalances in the euro area

Regulation (EU) No 1175/2011 of the European Parliament and of the Council of 16 November 2011 amending Council Regulation (EC) No 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies

Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances

Council Regulation (EU) No 1177/2011 of 8 November 2011 amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure

Regulation (EU) No 472/2013 of the European Parliament and of the Council of 21 May 2013 on the strengthening of economic and budgetary surveillance of Member States in the euro area experiencing or threatened with serious difficulties with respect to their financial stability

Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013 on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area

The EU's economic governance explained (European Commission - Fact Sheet)

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN CENTRAL BANK, THE ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK Making the best use of the flexibility within the existing rules of the stability and growth pact - COM(2015) 12 final provisional

Stability and Growth Pact: Commission issues guidance to encourage structural reforms and investment (European Commission - Press release, 13 January 2015)

Related links

A Deeper and Fairer Economic and Monetary Union (European Commission)

Stability and Growth Pact (European Commission)

Six-pack? Two-pack? Fiscal compact? A short guide to the new EU fiscal governance (European Commission)

Timeline: The Evolution of EU Economic Governance in Historical Context (European Commission)

Review of the economic governance framework: stocktaking and challenges (European Parliament)