On the European Semester for economic policy coordination 2026

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on the European Semester for economic policy coordination 2026

(2025/2214(INI))

The European Parliament,

– having regard to the Treaty on the Functioning of the European Union (TFEU), and in particular Articles 121, 126 and 136 thereof,

– having regard to Protocol No 1 to the Treaty on European Union (TEU) and the TFEU on the role of national parliaments in the European Union,

– having regard to Protocol No 2 to the TEU and the TFEU on the application of the principles of subsidiarity and proportionality,

– having regard to the Paris Agreement of the Conference of the Parties to the United Nations Framework Convention on Climate Change of 12 December 2015 and the UN Sustainable Development Goals,

– having regard to Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’)1,

– having regard to Protocol No 12 to the TEU and the TFEU on the excessive deficit procedure,

– having regard to the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union,

– having regard to Regulation (EU) 2024/1263 of the European Parliament and of the Council of 29 April 2024 on the effective coordination of economic policies and on multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/972,

– having regard to Council Regulation (EU) 2024/1264 of 29 April 2024 amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure3,

– having regard to Council Directive (EU) 2024/1265 of 29 April 2024 amending Directive 2011/85/EU on requirements for budgetary frameworks of the Member States4,

– having regard to Regulation (EU) No 1173/2011 of the European Parliament and of the Council of 16 November 2011 on the effective enforcement of budgetary surveillance in the euro area5,

– having regard to Regulation (EU) No 1174/2011 of the European Parliament and of the Council of 16 November 2011 on enforcement measures to correct excessive macroeconomic imbalances in the euro area6,

– having regard to Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances7,

– having regard to Regulation (EU) No 472/2013 of the European Parliament and of the Council of 21 May 2013 on the strengthening of economic and budgetary surveillance of Member States in the euro area experiencing or threatened with serious difficulties with respect to their financial stability8,

– having regard to Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013 on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area9,

– having regard to the Commission’s Spring 2025 Economic Forecast of 15 May 2025,

– having regard to the Commission’s Autumn 2025 Economic Forecast of 17 November 2025,

– having regard to the Commission’s Debt Sustainability Monitor 2024 of 17 March 2025,

– having regard to the Commission communication of 19 March 2025 entitled ‘Accommodating increased defence expenditure within the Stability and Growth Pact’ (C(2025)2000),

– having regard to the report of 9 September 2024 by Mario Draghi entitled ‘The future of European competitiveness’ (the Draghi report),

– having regard to the White Paper for European Defence – Readiness 2030 of 20 March 2025,

– having regard to Rule 55 of its Rules of Procedure,

– having regard to the opinion of the Committee on Budgets,

– having regard to the report of the Committee on Economic and Monetary Affairs (A10-0000/2025),

A. whereas the European Semester plays an essential role in coordinating and aligning economic and budgetary policies in the Member States;

B. whereas the European Semester recommendations in 2026 will play an essential role in the design of the national and regional partnership plans to be prepared by Member States in 2027;

C. whereas according to the Commission’s 2025 autumn forecast, GDP growth in the EU is expected to be close to potential growth, with full employment and inflation close to the target level;

D. whereas the EU has daunting investment needs, including for an additional annual investment of EUR 800 billion that the Draghi report deems necessary to boost Europe’s competitiveness and an additional EUR 800 billion sought for further defence spending under the ReArm Europe Plan/Readiness 2030;

E. whereas the EU is facing major challenges, ranging from threats arising at its eastern borders to geopolitical instability and trade uncertainty, while long-term challenges such as the green and digital transitions remain;

F. whereas the TFEU establishes reference values of up to 3 % for government deficit and 60 % for the debt-to-GDP ratio;

G. whereas the Council has not launched any procedures concerning excessive macroeconomic imbalances since the establishment of this procedure in 2011;

H. whereas this Commission is committed to being an ‘investment Commission’ but has not yet taken significant action to boost EU investment to a level commensurate with the needs of the green and digital transitions;

Economic prospects for the EU

1. Notes that over the last five years, the EU has faced major challenges, including the outbreak of the COVID-19 pandemic and the Russian war in Ukraine, which have had major economic impacts; underlines the effectiveness of EU-wide initiatives to address the economic consequences of external shocks, in particular the Recovery and Resilience Facility (RRF);

2. Notes that, according to the Commission’s autumn 2025 economic forecast, the EU’s GDP is expected to increase by 1.4 % in 2025 compared to 2024;

3. Notes that the general government gross debt-to-GDP ratio is expected to reach 82.8 % in 2025;

4. Expresses concern that insufficient private and public investment is likely to hinder sustainable growth in Europe and prevent the EU from meeting the common priorities stated in the EU strategic agenda 2024-2029;

5. Recalls that extreme weather events have a material impact on public finance; is aware that the impact and frequency of extreme weather events will only increase in the coming years as a result of climate change;

6. Welcomes the fact that inflation has been brought down to the European Central Bank target level after reaching its peak level of 10.6 % in October 2022; notes, however, that inflation remains at different levels across the Member States, with higher levels in Member States with energy-intensive industries;

7. Is concerned by the macroeconomic stability risks posed by rising housing prices across the Member States, in particular potential restrictions on labour mobility and weakening of the growth in productivity;

8. Notes that on average the employment rate in the EU has reached a record-high level; welcomes the integration of the social convergence framework into the joint employment report of the European Semester;

Revised EU economic governance framework

9. Recalls that the purpose of the reform of the economic governance framework is to improve its ability to accommodate the heterogeneity of fiscal positions, public debt and economic challenges, and to help address the medium- and long-term challenges that the EU faces;

10. Takes note of the targeted amendments to the EU’s economic governance framework published by the Commission on 2 October 2025;

Fiscal stance

11. Expresses concern over the fact that the RRF is coming to an end in 2026 and over the impact that this might have on the EU’s overall fiscal stance;

12. Notes that the overall fiscal stance of the Member States is broadly neutral in 2025, despite significant disparities across the Member States;

Country-specific recommendations (CSRs)

13. Notes the Commission’s commitment to use the European Semester to promote competitiveness, sustainability and social fairness, as well as to integrate the UN Sustainable Development Goals and the European Pillar of Social Rights into the European Semester;

14. Recalls the role of CSRs in coordinating EU priorities; notes the lack of progress in the effective implementation of the CSRs; calls on the Commission to rethink the way CSRs are developed and followed up; stresses that CSRs should be subject to stronger democratic oversight by the European Parliament; calls for the greater involvement of key stakeholders, such as social partners and civil society organisations, in the drawing up of CSRs;

15. Takes notes of the Commission’s intention to further reflect in the CSRs the actions that are instrumental to the savings and investments union, as announced in the Commission communication of 19 March 202510;

16. Notes that CSRs are set to play a greater role in the next multiannual financial framework for guiding investment and reform at national and regional levels; is of the opinion that the selection of reforms and investments should be guided by their effectiveness in addressing the relevant CSRs for achieving a just transition towards a green economy; underlines that this process must be accompanied by stronger democratic scrutiny;

17. Notes that the 2025 CSRs focus more on competitiveness and simplification; regrets the fact that fewer CSRs are dedicated to social and climate policies;

Closing the investment gap

18. Recalls that the Draghi report forcefully demonstrated the need to increase public and private investment to boost EU competitiveness;

19. Calls for the establishment of other EU-wide investment capacities to maintain the EU’s capacity to make the necessary investments;

20. Notes that the evolving geopolitical environment requires even more unity and solidarity among the Member States; supports the efforts made by the Commission to move towards a more coordinated approach to defence; notes that the Security Action For Europe (SAFE) instrument establishes a loan facility of EUR 150 billion to support Member States’ investments in defence; regrets, however, the fact that the SAFE instrument was based on Article 122 TFEU, limiting parliamentary oversight;

21. Notes that only 16 Member States have activated the national escape clause for defence spending;

22. Recalls that the Commission has never launched an excessive imbalance procedure, despite the fact that some Member States have recurrent current account imbalances;

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23. Instructs its President to forward this resolution to the Council and the Commission.

EXPLANATORY STATEMENT

The European Semester is a significant instrument for coordinating economic and budgetary policy across Member States in the EU with wider implications across other policy areas. The 2026 own initiative report on the European Semester emphasises the considerable investment needs that the EU faces in a situation of increased geopolitical uncertainty, threats on its eastern borders, and major structural challenges related to the competitiveness, resilience and sustainability of the European economy. The rapporteur stresses the need for the EU to meet these challenges and mobilise the necessary public and private investments, in particular related to the green transition, competitiveness and security and defence. The report commends the Commission on the EU-wide instruments applied in response to recent challenges and external shocks, including the Recovery and Resilience Facility (RRF) and the Security Action for Europe (SAFE) instrument, yet expresses concern that we are still far from the targets detailed in the Draghi report for meeting the EU’s wider investment needs.

The draft report notes that deficit and debt levels vary quite significantly across Member States, which require tailormade policies and recommendations to achieve long-term fiscal sustainability. The report also notes that the average employment rate across the EU has reached a record high. At the same time, the report notes with concern that the RRF is coming to an end in 2026, which may have a negative impact on the overall fiscal stance of the EU. The report also expresses concern over the impact that extreme weather events may have on public finances in the coming years, as well as over the macroeconomic risks associated with increased housing prices across the EU.

On Country Specific Recommendations (CSRs), the report notes the lack of progress in implementing CSRs in Member States and calls for the Commission to rethink the development of and follow-up on CSRs, in particular through a greater inclusion of the European Parliament and key stakeholders such as social partners and civil society organisations. Moreover, the rapporteur encourages the Commission to dedicate more CSRs to climate and social policies. The report also takes note of the plan to give CSRs a more central role in the coming MFF for guiding national and regional investments and reforms, and the rapporteur expresses her view that investments and reforms should be prioritised according to which are the most effective in achieving a just transitions toward a green economy.