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DRAFT REPORT (2024/2112(INI))

On the European Semester for economic policy coordination 2025

ECON-PR-766678

Committee on Economic and Monetary Affairs · Rapporteur: Fernando Navarrete Rojas

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This draft report on the European Semester for economic policy coordination 2025 notes the EU's resilience and calls for responsible fiscal policies, structural reforms, and productivity-enhancing investments. It expresses concern over high debt levels and excessive deficits in eight Member States, and stresses the need for rigorous implementation of the revised EU economic governance framework. The report criticizes delays in submitting national fiscal plans, deviations from expenditure paths, and lack of consultations, and calls on the Commission to prevent procyclical policies. It agrees with the Eurogroup on the need for gradual fiscal consolidation in 2025 and calls for a mechanism to ensure an appropriate cyclical fiscal stance for the EU. It laments the drop in fully implemented country-specific recommendations and reminds Member States to address them, especially on pension and healthcare sustainability.

Committee position. The rapporteur proposes a resolution that notes the EU's resilience, calls for fiscal consolidation and structural reforms, stresses rigorous enforcement of the new governance framework, and urges timely submission of national plans and implementation of country-specific recommendations.

Key points

  1. Notes the EU's resilience and calls for responsible fiscal policies, structural reforms, and investments that increase productivity.
  2. Believes that overcoming competitive and geopolitical challenges requires transferring expenditure to the EU level for European public goods, including defence.
  3. Highlights that a consistent industrial policy is vital to increase investments in innovation while preserving competitiveness and the single market.
  4. Notes the Commission's forecast of EU GDP growth of 0.9% in 2024 and 1.5% in 2025, with risks tilted to the upside.
  5. Concerned that public debt ratios are projected to rise to 83.0% in the EU and 89.6% in the euro area in 2025.
  6. Regrets that eight Member States have excessive deficits and welcomes remedial action.
  7. Recalls that the reform aims to make the framework simpler, more transparent, and effective, with greater national ownership and better enforcement.
  8. Deplores low past enforcement and stresses the need for equal treatment and rigorous implementation of the new framework.
  9. Regrets that not all Member States submitted their national plans on time and that some delayed fiscal adjustments to the end of the period.
  10. Calls on the Commission to ensure sound economic arguments for deviations and to prevent procyclical policies.
  11. Laments that only seven Member States sought an opinion from independent fiscal institutions and that several did not consult regional authorities or parliaments.
  12. Agrees with the Eurogroup on the need for gradual fiscal consolidation in 2025 and calls for a mechanism to ensure an appropriate cyclical fiscal stance.

Who is affected

  • Member States: must submit national fiscal plans on time, consult stakeholders, and implement country-specific recommendations.
  • The Commission: must ensure sound economic arguments for deviations and prevent procyclical policies.
  • The Council: called on to propose a mechanism for an appropriate cyclical fiscal stance.

Figures and deadlines

  • EU GDP growth expected at 0.9% in 2024 and 1.5% in 2025.
  • Euro area GDP growth expected at 0.8% in 2024 and 1.3% in 2025.
  • Public debt ratio projected to rise to 83.0% in the EU and 89.6% in the euro area in 2025.
  • Public debt ratio in 2024: 82.4% for the EU and 89.1% for the euro area.
  • Eight Member States have excessive deficits.
  • Rate of fully implemented country-specific recommendations dropped from 18.1% (2011-2018) to 13.9% (2019-2023).

Legal basis: Articles 121, 126 and 136 of the Treaty on the Functioning of the European Union