![New economic governance rules [EU Legislation in Progress]](https://i0.wp.com/epthinktank.eu/wp-content/uploads/2023/05/EPRS-Briefing-747906-Economic-governance-review-FINAL.png?fit=1024%2C609&ssl=1)
Written by Martin Höflmayr (3rd edition, updated on 07.02.2024).
On 26 April 2023, the European Commission published a package of three proposals to revise the EU’s economic governance framework: a regulation to replace the current preventive arm of the stability and growth pact (SGP), an amending Council regulation on the corrective arm of the SGP, and an amending Council directive to strengthen the role of independent fiscal institutions. The main proposal on the preventive arm is to be adopted through the ordinary legislative procedure with the European Parliament and the Council as co-legislators.
The reform proposals would see the Commission bilaterally negotiating a fiscal-structural plan with Member States, with a minimum 4-year horizon; possible extension of the fiscal adjustment path to seven years would provide an incentive to include investment and reform commitments. Greater political buy-in and better Member State ownership of the medium-term plan is also envisaged. Both reference values – the 3 % deficit-to-GDP and 60 % debt-to-GDP ratios – would remain unchanged, the proposal introduces three additional safeguards: two numerical requirements over the agreed plan’s horizon and a minimum fiscal adjustment of 0.5 % of GDP per annum if a country is expected to be above the 3 % deficit ratio threshold in an excessive deficit procedure.
Both the European Parliament and the Council have adopted their mandates on the preventive arm of the SGP, paving the way to interinstitutional negotiations, which started in January 2024. These might revolve around three main topics: safeguards, the role of independent fiscal institutions, and transitory provisions.
Complete version
- February 2024: New economic governance rules (3rd edition)
| (A) Proposal for a regulation on the effective coordination of economic policies and multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97; (B) Proposal for a Council regulation amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure; (C) Proposal for a Council directive amending Directive 2011/85/EU on requirements for budgetary frameworks of the Member States |
| Committee responsible: | Economic and Monetary Affairs (ECON) | COM(2022) 240; COM(2022) 241; COM(2023) 242; 26.4.2023 |
| Rapporteurs: | Esther de Lange (EPP, Netherlands); Margarida Marques (S&D, Portugal) | 2023/0138(COD); 2023/0137(CNS); 2023/0136(NLE) |
| Shadow rapporteurs: | Billy Kelleher (Renew, Ireland), Philippe Lamberts (Greens/EFA, Belgium) Johan Van Overtveldt (ECR, Belgium), Antonio Maria Rinaldi (ID, Italy), José Gusmao (The Left, Portugal) | Ordinary legislative procedure (COD); Consultation procedure; Non-legislative enactment |
Next steps expected: Conclusion of trilogue negotiations
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