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DRAFT REPORT (COM2023)0240 – C90150/2023 – 2023/0138(COD))

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

ECON-PR-754668

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

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This is the rapporteur's draft report on the proposed regulation on effective coordination of economic policies and multilateral budgetary surveillance, which would repeal Council Regulation (EC) No 1466/97. It proposes amendments to the Commission proposal, replacing the 'technical trajectory' with a 'reference trajectory' proposed by each Member State and negotiated with the Commission. It adds the European Parliament's involvement in the European Semester, a European Advisory Fiscal Board, a scoreboard, and a medium-term fiscal-structural plan dialogue. It sets rules on national medium-term fiscal-structural plans, net expenditure paths, control accounts, escape clauses, and monitoring missions.

Committee position. The rapporteur proposes to amend the Commission proposal by replacing the technical trajectory with a reference trajectory proposed by Member States, strengthening the role of the European Parliament, and adding a European Advisory Fiscal Board and a scoreboard.

Key points

  1. The regulation would set rules for coordinating Member States' economic policies and for multilateral budgetary surveillance, with the European Parliament involved.
  2. Each Member State with public debt above 60% of GDP or a government deficit above 3% of GDP would propose a reference trajectory to the Commission, followed by a dialogue.
  3. If the Commission and the Member State disagree after the dialogue, the reference trajectory put forward by the Commission would apply.
  4. The reference trajectory would have to put debt on a plausibly downward path, keep the deficit below 3% of GDP, and stabilise and reduce the debt ratio by at least [x] p.p. of GDP on average over the projection period.
  5. National medium-term fiscal-structural plans would present a net expenditure path with nominal targets for at least 4 years and explain how they address the Union's common priorities.
  6. Member States would consult civil society, social partners and national parliaments before submitting their plans, and make the plans public including negotiation data.
  7. The Commission would set up a control account for each Member State to track deviations from the net expenditure path, with non-compliance if the cumulated balance exceeds [X% of GDP] in years of positive GDP growth.
  8. A European Advisory Fiscal Board would be established as an independent expert group to advise on economic policy coordination.
  9. A scoreboard would be established by delegated act to display progress on implementing the plans, operational by 1 June 2024 and updated twice a year.
  10. The European Parliament would be regularly involved in the European Semester, receive plans and assessments, and hold a medium-term fiscal-structural plan dialogue with the Commission every two months.
  11. The Commission would undertake monitoring missions in Member States subject to recommendations, and could invite ECB representatives for euro-area or ERM2 Member States.
  12. The Commission would review the regulation by 31 December 2028 and every 5 years thereafter, assessing delegated powers, country-specific recommendations and investment progress.

Who is affected

  • Member States, which would propose reference trajectories, submit medium-term fiscal-structural plans and annual progress reports, and face monitoring.
  • The Commission, which would assess plans, set up control accounts and the scoreboard, and establish the European Advisory Fiscal Board.
  • The Council, which would set net expenditure paths and endorse reform and investment commitments on Commission recommendations.
  • The European Parliament, which would be involved in the European Semester and hold dialogues with the Commission and Council.
  • National independent fiscal institutions, which would assess compliance of budgetary outturns with the net expenditure path.

Figures and deadlines

  • 60% of GDP reference value for public debt, above which a Member State proposes a reference trajectory.
  • 3% of GDP reference value for government deficit, above which a Member State proposes a reference trajectory.
  • 0,25% of GDP limit for national co-financing of Union programmes in the definition of net expenditure.
  • Minimum adjustment period of 4 years, extendable by a maximum of 3 years.
  • Projection period for debt reduction: adjustment period plus 10 years.
  • Deadline of 30 April each year for Member States to submit annual progress reports.
  • Scoreboard operational by 1 June 2024, updated twice a year.
  • Review by 31 December 2028 and every 5 years thereafter.

Legal basis: Article 294(2) and Article 121(6) of the Treaty on the Functioning of the European Union.