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REPORT (COM(2023)0240 – C90150/2023 – 2023/0138(COD))

On the proposal for a regulation of the European Parliament and of the Council the effective coordination of economic policies and multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97

A-9-2023-0439

Committee on Economic and Monetary Affairs · Rapporteur: Esther de Lange, Margarida Marques

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Parliament's amended version of the Commission proposal for a regulation on the effective coordination of economic policies and multilateral budgetary surveillance, repealing Council Regulation (EC) No 1466/97. It sets rules for national medium-term fiscal-structural plans, a single net expenditure indicator, a Commission reference trajectory, and a control account for deviations. Member States must submit plans with a net expenditure path of at least 4 years, reform and investment commitments, and annual progress reports. The Council sets the net expenditure path on a Commission recommendation. The adjustment period can be extended by up to 3 years if a Member State commits to a set of verifiable reforms and investments meeting criteria such as growth enhancement, fiscal sustainability and addressing Union priorities. The Commission monitors compliance via a control account; a cumulated deviation above 1% of GDP in years of positive growth means non-compliance. General and country-specific escape clauses allow deviations in severe downturns or exceptional circumstances. The European Parliament is to be involved in the European Semester through dialogues and receives documents on equal terms with the Council. The Commission establishes a European Fiscal Board and a scoreboard.

Committee position. The Committee on Economic and Monetary Affairs adopts Parliament's position at first reading, amending the Commission proposal to strengthen national medium-term fiscal-structural plans, introduce a control account, allow extensions of the adjustment period for reforms and investments, and enhance the role of the European Parliament and independent fiscal institutions.

Key points

  1. The regulation sets rules for coordinating Member States' economic policies and multilateral budgetary surveillance, supporting sustainable and inclusive growth, quality employment and competitiveness.
  2. Each Member State must submit a national medium-term fiscal-structural plan with a net expenditure path of at least 4 years, macroeconomic assumptions and planned fiscal-structural measures.
  3. For Member States with debt above 60% of GDP or deficit above 3% of GDP, the Commission puts forward a reference trajectory ensuring debt is on a downward path and the deficit stays below 3% of GDP.
  4. The reference trajectory must reduce the debt ratio by at least one percentage point per year for debt above 90% of GDP and at least half a percentage point for debt between 60% and 90% of GDP.
  5. The adjustment period can be extended by up to 3 years if the Member State commits to a set of verifiable and time-bound reforms and investments that are growth-enhancing, support fiscal sustainability and address Union priorities.
  6. The Commission sets up a control account tracking deviations from the net expenditure path; a cumulated balance above 1% of GDP in years of positive growth means non-compliance.
  7. The Commission may exceptionally allow a Member State to exceed the 1% of GDP control account limit for strategic investments addressing Union priorities, for up to 5 years.
  8. A general escape clause allows deviation from the net expenditure path in a severe economic downturn in the euro area or the Union, subject to a Council recommendation.
  9. A country-specific escape clause allows deviation for exceptional circumstances outside a Member State's control with a major impact on its public finances, subject to a Council recommendation.
  10. Member States must submit annual progress reports by 30 April each year on implementation of the net expenditure path and reform and investment commitments.
  11. The Commission establishes a European Fiscal Board as an independent expert group advising on economic policy coordination, and a scoreboard operational by June 2024 updated twice a year.
  12. The European Parliament is involved in the European Semester through dialogues; the Commission transmits plans, assessments and other documents to Parliament and Council simultaneously and on equal terms.

Who is affected

  • Member States, which must submit medium-term fiscal-structural plans, annual progress reports and comply with the net expenditure path.
  • National independent fiscal institutions, which provide opinions on plans and assess compliance with the net expenditure path.
  • The Commission, which assesses plans, sets reference trajectories, monitors implementation and adopts delegated acts.
  • The Council, which sets the net expenditure path and endorses reform and investment commitments on a Commission recommendation.
  • The European Parliament, which is involved through dialogues and receives information on equal terms with the Council.

Figures and deadlines

  • 60% of GDP reference value for public debt.
  • 3% of GDP reference value for government deficit.
  • At least one percentage point of debt to GDP reduction per year for debt-to-GDP ratio exceeding 90%.
  • At least half a percentage point of debt to GDP reduction per year for debt-to-GDP ratio of 60% to 90%.
  • Adjustment period of at least 4 years, extendable by a maximum of 3 years.
  • Control account non-compliance threshold: cumulated balance higher than 1% of GDP in years of positive GDP growth.
  • National co-financing of Union programmes capped at 0.25% of GDP.
  • Scoreboard operational by June 2024, updated twice a year.

Legal basis: Article 121(6) of the Treaty on the Functioning of the European Union.