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European Semester for economic policy coordination 2026

TA-10-2026-0075 · P10_TA(2026)0075 · PE779.614

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Parliament's resolution on the 2026 European Semester notes the EU's economic outlook, including moderate growth and high debt, and calls for prudent fiscal policies and investment to boost competitiveness.

Key points

  1. Notes the EU's GDP growth is expected to be 1.4% in 2025 and 2026, with potential growth declining from 1.5% in 2024 to 1.3% in 2027.
  2. Calls on Member States to pursue prudent fiscal policies to safeguard public debt sustainability.
  3. Expresses concern that insufficient investment may hinder growth and competitiveness, and stresses the need to remove barriers and mobilise private investment.
  4. Highlights that the employment rate is at a record high but notes large differences in unemployment, especially among young people.
  5. Recalls that the reformed economic governance framework uses net expenditure growth as the single operational indicator and notes that many Member States lack fiscal capacity for investment.
  6. Stresses that the Commission's expanded discretionary powers must be applied evenly and accompanied by accountability mechanisms.
  7. Urges Member States to complete recovery and resilience plans by August 2026 and notes the RRF's end in 2026.
  8. Calls for new own resources and supports the creation of the European Competitiveness Fund and Scaleup Europe Fund.
  9. Notes the SAFE instrument's EUR 150 billion loan facility for defence and regrets its legal basis limiting parliamentary oversight.
  10. Notes that 16 Member States activated the national escape clause for defence spending, reducing projected additional defence expenditure from EUR 650 billion to approximately EUR 297-337 billion.
  11. Cautions that defence spending is consumptive and should not be financed through increased debt in the long term.
  12. Recalls that the Commission has never launched an excessive imbalance procedure despite recurrent imbalances in some Member States.

Who is affected

  • Member States, particularly those with high debt or excessive deficits, are called to pursue prudent fiscal policies and implement reforms.
  • The Commission is asked to clarify CSR selection procedures and ensure even application of fiscal rules.
  • Defence spending in Member States is given flexibility through the national escape clause, affecting fiscal planning.

Figures and deadlines

  • GDP growth of 1.4% in 2025 and 2026
  • Potential growth declining from 1.5% in 2024 to 1.3% in 2027
  • Euro area deficit projected at 3.2% of GDP in 2025 and 3.3% in 2026
  • 12 Member States with deficits exceeding 3% of GDP in 2027
  • EU debt-to-GDP ratio expected to reach 82.8% in 2025, 83.8% in 2026, 84.5% in 2027
  • Inflation peaked at 10.6% in October 2022
  • 25.1% of CSRs showed no or limited progress between 2019 and 2023
  • EUR 90 billion loan to Ukraine for 2026 and 2027

Legal basis: Articles 121, 126 and 136 TFEU