On the European Semester for economic policy coordination 2026
ECON-PR-779614
Committee on Economic and Monetary Affairs · Rapporteur: Kira Marie Peter-Hansen
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This draft report on the European Semester for economic policy coordination 2026 notes the EU's investment needs and challenges, and calls for stronger implementation and democratic oversight of country-specific recommendations.¶¶¶ It expresses concern about the end of the Recovery and Resilience Facility in 2026 and the lack of excessive imbalance procedures, and supports coordinated defence investment while regretting limited parliamentary oversight of the SAFE instrument.¶¶¶
Committee position. The rapporteur proposes a resolution that notes the EU's investment needs and challenges, calls for improved implementation and democratic oversight of CSRs, and supports coordinated defence investment while regretting limited parliamentary oversight of SAFE.¶¶¶
Key points
- Notes that EU GDP is expected to increase by 1.4 % in 2025 and that the general government gross debt-to-GDP ratio is expected to reach 82.8 % in 2025.¶¶
- Expresses concern that insufficient investment may hinder sustainable growth and prevent the EU from meeting its strategic agenda priorities.¶
- Recalls that extreme weather events have a material impact on public finance and will increase in frequency due to climate change.¶
- Welcomes the reduction of inflation to the ECB target level after peaking at 10.6 % in October 2022, but notes disparities across member states.¶
- Is concerned about macroeconomic stability risks from rising housing prices, including restrictions on labour mobility and weaker productivity growth.¶
- Notes the record-high employment rate and welcomes the integration of the social convergence framework into the joint employment report.¶
- Recalls that the reform of the economic governance framework aims to accommodate heterogeneity and address medium- and long-term challenges.¶
- Expresses concern that the end of the RRF in 2026 might impact the EU's overall fiscal stance.¶
- Calls on the Commission to rethink how CSRs are developed and followed up, and for stronger democratic oversight and involvement of social partners and civil society.¶
- Regrets that fewer CSRs are dedicated to social and climate policies, and calls for more CSRs in these areas.¶¶
- Calls for other EU-wide investment capacities to maintain the EU's ability to invest, and supports coordinated defence efforts while regretting the SAFE instrument's limited parliamentary oversight.¶¶
- Notes that only 16 member states have activated the national escape clause for defence spending, and that the Commission has never launched an excessive imbalance procedure.¶¶
Who is affected
- Member states, which are subject to country-specific recommendations and fiscal surveillance under the European Semester.¶¶
- The European Commission, which is called on to improve CSR development and follow-up and to increase investment.¶
- Social partners and civil society organisations, which should be more involved in drawing up CSRs.
- The European Parliament, which should have stronger democratic oversight of CSRs.
Figures and deadlines
- GDP growth of 1.4 % in 2025¶
- Debt-to-GDP ratio of 82.8 % in 2025¶
- Inflation peak of 10.6 % in October 2022¶
- EUR 800 billion additional annual investment needed for competitiveness (Draghi report)¶
- EUR 800 billion for defence spending under ReArm Europe Plan/Readiness 2030
- EUR 150 billion loan facility for defence under SAFE¶
- 16 member states activated the national escape clause for defence spending¶
Legal basis: Articles 121, 126 and 136 of the Treaty on the Functioning of the European Union¶