Changes from report parliamentary committee draft to plenary report

RemovedD. whereas the debt-to-GDP ratio is expected to decrease to 83.1 % in the EU (90.4 % in the euro area); whereas the debt-to-GDP ratio is expected to marginally decline in the EU to around 82.7 % in 2024 and 82.5 % in 2025;

AddedD. whereas inflation is projected to fall from 6.3 % in 2023 to 3.0 % in 2024 and 2.5 % in 2025 in the EU and from 5.4 % in 2023 to 2.7 % in 2024 and 2.2 % in 2025 in the euro area, according to the Commission’s winter 2024 forecast; whereas fiscal policy needs to support monetary policy in reducing inflation and safeguarding fiscal sustainability, while providing sufficient space for additional investments and supporting long-term growth;

RemovedE. whereas a swift, decisive and coordinated policy response allowed the EU economy to rebound and address the socioeconomic consequences of the COVID-19 pandemic and Russia’s war of aggression against Ukraine, and has allowed it to navigate through the resulting energy crisis, the economic slowdown in 2023 and a period of high risk and uncertainty, including as a result of the situation in the Middle East;

AddedE. whereas inflation affects income groups disparately and low-income groups suffer disproportionately; whereas inflation could create a genuine cost-of-living crisis for certain population segments, posing challenges to social cohesion;

RemovedF. whereas EU funding has proven to be an essential tool to provide macroeconomic stabilisation at EU level and increase its internal and external resilience in times of crisis while supporting Member States in financing necessary investments in EU priorities to tackle current and future challenges;

AddedF. whereas the debt-to-GDP ratio is expected to decrease to 83.1 % in the EU in 2023 (90.4 % in the euro area); whereas the debt-to-GDP ratio is expected to marginally decline in the EU to around 82.7 % in 2024 and 82.5 % in 2025; whereas the euro area debt-to GDP ratio is expected to decrease to around 89.7 % in 2024 and 89.5 % in 2025; whereas there is a high variation in the debt levels of different Member States; whereas high debt-to-GDP ratios combined with high interest rates and an uncertain macroeconomic situation may jeopardise long-term debt sustainability and economic stability;

AddedG. whereas according to the Commission’s autumn 2023 forecast, the general government deficit in the EU and the euro area is expected to decline to 3.2 % of GDP in 2023 and to further decrease to 2.8 % of GDP in 2024 and 2.7 % in 2025; whereas the general escape clause of the Stability and Growth Pact was deactivated at the end of 2023; whereas the Commission has announced that it will submit a proposal to the Council on initiating the deficit-based excessive deficit procedure in spring 2024 on the basis of the out-turn data for 2023, in line with existing legal provisions;

AddedH. whereas in 2023 and 2024, the aggregate fiscal stance is expected to turn contractionary, by 0.5 % of GDP in both years, primarily due to the near complete phase out of crisis-related energy measures;

AddedI. whereas a swift, decisive and coordinated policy response allowed the EU economy to rebound and tackle the socioeconomic consequences of the COVID-19 pandemic and Russia’s war of aggression against Ukraine, and to navigate through the resulting energy crisis; whereas the economy slowed down in 2023; whereas the outlook remains characterised by high uncertainty and risks related to the evolution of Russia’s ongoing war of aggression against Ukraine and the conflict in the Middle East;

AddedJ. whereas those disruptive geopolitical events have demonstrated the need for the European Union to further strengthen its open strategic autonomy and remain competitive in the global market, while ensuring that no one is left behind;

AddedK. whereas EU funding has contributed to macroeconomic strength at EU level and increases the EU’s internal and external resilience in times of crisis, while supporting the Member States in financing necessary investments in EU priorities to tackle current and future challenges;

AddedL. whereas after a sizeable crisis-related expansion between 2020 and 2022, the fiscal stance in the euro area is expected to be restrictive in 2023 and 2024; whereas the fiscal stance should remain agile in the face of high uncertainty;

AddedM. whereas net public investment as a percentage of GDP fell sharply in the EU after the financial crisis resulting from the COVID-19 pandemic, reaching negative levels in some instances; whereas this ratio has not yet fully recovered; whereas the success of climate-neutral policies and the digital transformation relies on a common European approach and requires measures both at the EU and Member State level; whereas the future resilience of the EU is closely linked to increased public and private investments for sustainable growth and an ambitious structural reform agenda; whereas addressing the need for a timely strategy to ensure appropriate public investment levels following the expiration of the Recovery and Resilience Facility (RRF) in 2026 is imperative; whereas achieving the goals of the European Green Deal and the Paris Agreement requires significant public and private investments;

AddedN. whereas the Member States need to have the necessary monitoring and auditing mechanisms in place to ensure respect for the rule of law and to protect the EU’s financial interests, notably to prevent fraud, corruption and conflicts of interest and to ensure transparency; whereas it is important that the Member States implement the relevant enabling country-specific recommendations (CSRs) in this regard;

Removed6. Shares the view that the 2024 CSRs need to be focused on a limited set of challenges; underlines that CSRs must equally serve to enhance competitiveness, promote the green and digital transitions and ensure social fairness; stresses that CSRs need to take account of social vulnerabilities;

Added7. Calls on the Member States in the euro area to explore all means to complete the revision of the European Stability Mechanism Treaty to allow for the introduction of the common backstop to the Single Resolution Fund, which would further strengthen the euro area’s resilience;

Removed7. Is concerned that the performance-based financing and verification system of the RRF delivers in practice too little in terms of results and creates too much bureaucracy; calls for more flexibility to adjust milestones and targets to take account of lessons learned during the implementation process;

AddedEuropean Semester and the RRF

Removed8. Supports streamlining EU cohesion policy programmes with investment needs identified under the RRF and in CSRs; recalls that cohesion policy serves a broader set of objectives than the RRF; calls for a comparable incorporation of stakeholder participation in the drafting and implementation of national RRPs as it is for cohesion policy programmes;

Added8. Recalls that the European Semester is the well-established framework for coordinating the budgetary, economic, social and employment policies across the Union in accordance with the Treaties, including the European Pillar of Social Rights, thereby safeguarding its macroeconomic stability, the sustained convergence of the economic performances of the Member States and the EU’s social cohesion; calls for stronger national ownership in the European Semester by the Member States, for example through their local and regional authorities; notes that the 2023 Green Deal industrial plan is part of the EU’s growth strategy;

RemovedReform of the EU economic governance framework

Added9. Shares the view that the 2024 CSRs need to be focused on specific criteria; underlines that they must also serve to promote sound and inclusive economic growth, enhance competitiveness and macroeconomic stability, promote the green and digital transitions and ensure social and inter-generational fairness; takes account of the differences regarding the national forecasts for GDP growth, inflation, unemployment, general government balance, gross public debt and current account balance and notes that they demonstrate the need for flexible approaches based on the specific reality of each Member State; calls, in that regard, on the Commission to link the CSRs more closely to the respective country reports; calls for efficient monitoring of the implementation of the CSRs and the relevant reforms, as well as of the progress on reducing identified investment gaps; stresses that the CSRs need to take account of social vulnerabilities and unemployment; notes the declining number of social CSRs based on the social scoreboard;

Removed9. Considers it necessary to reform the EU fiscal rules and welcomes the proposals put forward by the Commission;

Added10. Welcomes flexibility in adjusting the RRF, e. g. in the context of REPowerEU, based on lessons learned from its implementation; highlights that the milestones and targets in national recovery plans should be consistent with the CSRs and that Member States should address at least a significant subset of the CSRs, as part of their national recovery and resilience plans; emphasises the RRF’s success; recalls that the success and the effectiveness of the financed projects will be measured by their impact on the economy and employment and calls for a rapid, transparent and effective implementation of these projects; underlines, in this regard, that compliance with the RRF Regulation and proper implementation is crucial for the credibility of the RRF;

Removed10. Underlines that the reform must lead to a simplification of the framework, be more country-specific and strengthen its enforceability, and enable Member States to meet the public investment needs for the green and digital transitions of their economies without undermining the sustainability of government debt;

Added11. Notes the role played by the RRF in addressing global challenges stemming from the green transition and the digital transformation of the economy; stresses that reforms and investments under the recovery and resilience plans contribute to the climate targets of the RRF Regulation and respect the ‘do no significant harm’ principle; calls on the Member States to make the most of this opportunity and to use the RRF to transform their economies and make them more competitive; recalls the importance of verifying that the funds reach the real economy and SMEs and underlines the importance of accountability and transparency for bodies that receive EU funding;

Removed11. Welcomes that lessons have been learned from the design choices of the RRF in linking national fiscal, reform and investment commitments with EU financial incentives such as grants and loans; greatly regrets that, unlike the RRF, the reform of the economic governance framework lacks the incentive mechanisms to support and promote necessary national policy reforms and investments; is concerned that some Member States will not have the financial capacity to finance the just green and digital transition on their own;

Added12. Underlines the importance of private and public investment in the context of the economic recovery and in managing the twin transitions; recalls that the RRF does not replace the specific role of national public investment; reiterates the need to ensure quality, transparency and accountability in public investment and national strategies to align with the objectives of the twin transitions; highlights that these nation strategies for the twin transitions should complement the RRF and other European investment instruments;

Removed12. Deplores that the interplay between macroeconomic imbalances and fiscal rules is not sufficiently addressed by the reform proposals; underlines that the financial stability of the EU depends on the macroeconomic balance between Member States’ economies and that restoring such a balance may require public spending;

Added13. Supports streamlining EU cohesion policy programmes with investment needs identified under the RRF and in CSRs; recalls that cohesion policy serves a broader set of objectives than the RRF and may complement the measures agreed on under the RRF; calls for stakeholder participation, including by social partners, civil society organisations and the business sector, to be comparably incorporated in the drafting and implementation of national recovery and resilience plans, as it is for cohesion policy programmes;

Removed13. Acknowledges the need to avoid enduring excessive deficits and calls for common rules based on objective criteria as a way to achieve this goal; stresses that, in return, those rules should not preclude temporary deviations from the net expenditure path due to dedicated, justifiable and strategically significant investments realising EU objectives;

Added14. Underlines that coordination between the relevant authorities, including between national governments and regional and local authorities, is essential to manage the RRF and to overcome administrative barriers and bureaucracy;

Removed14. Acknowledges the differences between individual Member States regarding the sustainability of their debt and their capacity to reduce debt while still being able to invest; emphasises therefore the need to allow Member States to have different debt reduction paths;

Added15. Takes note of the provisional political agreement reached between the co-legislators on 10 February 2024 on the reform of the EU economic governance framework, which aims to ensure the effective coordination of economic policies and the sustained convergence of the economic and social performance of the Member States;

Removed15. Welcomes the fact that the Commission negotiates with the Member States individual fiscal-structural plans; underlines that such an increase in discretionary power for the Commission must be accompanied by increased accountability towards the European Parliament;

Added16. Welcomes the lessons learned from the design choices for the governance of the RRF; notes that the reform of the economic governance framework does not provide EU financial incentive mechanisms to support and promote national policy reforms and investments; stresses that providing for the necessary level of public investment is crucial to achieve the main objectives of the reform of the economic governance framework and to address the current and future priorities of the Union; is concerned that some Member States will not have the financial capacity to finance the just green and digital transitions on their own;

Removed16. Considers the stronger involvement of national parliaments in determining the content and voting on fiscal structural plans to be a meaningful way to increase national ownership of fiscal structural plans;

Added17. Emphasises the role of the European Parliament in the EU’s economic governance framework and advocates for an increased engagement of the European Parliament in the European Semester, while fully respecting the competences established by the Treaties; notes the dialogue between the Commission and the Member States on their individual fiscal-structural plans; stresses the need for all Member States to be treated equally; underlines that an increase in discretionary power for the Commission in the development process for the medium-term fiscal-structural plans must be accompanied by increased compliance with the rules under the scrutiny of the European Fiscal Board, as well as increased accountability and an increase in the flow of information towards the European Parliament; recognises that the Economic Dialogue as part of the European Semester lays a useful foundation of accountability; considers that proper accountability would require that the European Parliament have instruments that allow it to apply consequences based on its assessment of the performance of the European Semester, in accordance with the Treaties;

Removed17. Recognises that the Economic Dialogue as part of the European Semester lays a useful foundation of accountability, but considers that proper accountability can only be achieved if the European Parliament has accountability instruments that allow it to apply consequences based on its assessment of the performance of the European Semester such as veto rights or holding Commissioners personally responsible;