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REPORT (COM(2023)0241 – C90172/2023 – 2023/0137(CNS))

On the proposal for a Council regulation amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure

A-9-2023-0444

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

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Written by a language model from the full text only; every figure comes from the text. The paragraph links open the paragraph a statement rests on — check the text itself before relying on it.

Parliament's amended version of the Commission proposal to amend Regulation (EC) No 1467/97 on the excessive deficit procedure. It approves the proposal as amended and asks the Commission and Council to align with Parliament's text. The amended regulation defines net expenditure, a control account and a corrective net expenditure path, and sets how the Commission and Council assess excessive deficits and set correction deadlines. It sets rules on abrogation of procedures, fines of up to 0,05% of GDP every 6 months capped at 0,5% of GDP, and transitional provisions for Member States already under a procedure.

Committee position. The Committee on Economic and Monetary Affairs approves the Commission proposal as amended and calls on the Commission and Council to align with Parliament's amended text.

Key points

  1. Parliament approves the Commission proposal as amended and calls on the Commission to alter its proposal accordingly.
  2. The regulation defines 'net expenditure' as government expenditure net of interest, discretionary revenue measures and other items outside government control.
  3. A 'control account' records a Member State's cumulated deviations of actual net expenditure from its net expenditure path.
  4. The Commission, when preparing a report under Article 126(3) TFEU, must treat substantial public debt challenges as a key factor leading to opening an excessive deficit procedure as a rule.
  5. The Council recommendation under Article 126(7) TFEU must set a maximum deadline of six months, or three months when warranted, for effective action and a deadline for correction.
  6. The corrective net expenditure path must be consistent with a minimum annual adjustment of at least 0,5% of GDP as a benchmark and put the debt ratio on a plausibly downward path.
  7. The Council may adopt a revised recommendation or notice extending the correction deadline by one year as a rule where effective action has been taken or exceptional circumstances occur.
  8. A Council decision under Article 126(12) TFEU to abrogate decisions requires the deficit to be durably below the reference value and, for a debt-based procedure, respect of the corrective net expenditure path over the previous 2 years.
  9. Fines amount to up to 0,05% of GDP for a 6-month period, paid every 6 months until effective action is taken, with a cumulated cap of 0,5% of GDP.
  10. The Commission must publish a report on the application of the regulation by 31 December 2028 and every five years thereafter.
  11. The Council must adopt a revised recommendation or notice for Member States already subject to one on the entry into force date and that have taken effective action.

Who is affected

  • Member States, which must follow the net expenditure path and corrective path set by the Council.
  • Participating Member States whose currency is the euro, which may face fines for non-compliance.
  • National independent fiscal institutions, which must give opinions on relevant factors and on the adequacy of measures.
  • The Commission and the Council, which assess deficits, set paths and decide on sanctions.

Figures and deadlines

  • 0,25% of GDP — cap for national expenditure on co-financing of Union-funded programmes in the net expenditure definition.
  • 3% of GDP — deficit reference value.
  • 60% of GDP — debt reference value.
  • six months — maximum deadline for effective action in a Council recommendation, or three months when warranted.
  • at least 0,5% of GDP — minimum annual adjustment benchmark for the corrective net expenditure path.
  • one year — extension of the correction deadline as a rule in a revised recommendation or notice.
  • 0,05% of GDP — maximum fine for a 6-month period.
  • 0,5% of GDP — cap on cumulated fines.

Legal basis: Article 126(14), second subparagraph, of the Treaty on the Functioning of the European Union.