Changes from report parliamentary committee draft to plenary report

In the report, concerns about weak growth rates in the EU due to the continuous impact of energy prices and inflation on household purchasing power and the performance of EU companies are expressed. The ECB’s efforts to address inflation is acknowledged but suggests that rising interest rates alone are insufficient; coordinated fiscal, structural, and regulatory policies are needed to be able to counteract the crisis-ridden environment. The text underscores that insufficient public and private investments in certain Member States impede sustainable growth, emphasizing the critical role of these investments in enhancing EU resilience, robustness, and competitiveness amid challenges.

Furthermore, the rapporteur discusses issues related to the European Semester, Recovery and Resilience Facility (RRF), and proposes reforms to the EU economic governance framework, including the need for simplification, enforceability, and support for green and digital transitions. While acknowledging lessons from the Recovery and Resilience Facility (RRF), the rapporteur regrets the lack of similar incentive mechanisms in the proposed economic governance framework reform. Concerns are raised about the financial capacity of some Member States to fund necessary green and digital transitions independently. Further concerns arise concerning the social dimension’s decline due to self-limitation of Country-Specific Recommendations (CSRs) and, resulting from this, a diminishing number of recommendations based on the Social Scoreboard. The rapporteur advocates focused 2024 CSRs, emphasizing their role in enhancing competitiveness, green and digital transitions, and social fairness, considering social vulnerabilities. Concerns about the RRF’s performance-based system inefficiency and bureaucracy are noted. This year’s annual Semester Report supports aligning EU cohesion policies with RRF and CSRs, urging stakeholder participation in National Recovery and Resilience Plans (NRRPs) akin to cohesion policy programs.

The rapporteur deplores the insufficient attention given to the interplay between macroeconomic imbalances and fiscal rules, emphasizing the importance of addressing this for the EU’s financial stability, potentially requiring public spending. It recognizes the need to restrain public spending to avoid excessive deficits, suggesting limitations based on objective criteria, with certain expenditures earmarked for necessary investments to be exempted.

Additionally, the strict performance-based financing and the verification system of the RRF are seen with concern, as more flexibility with a view to achieving the agreed investment objectives is needed. This is even more necessary if cohesion policy programmes should be streamlined with RRF investment needs. The reform of EU fiscal rules plays a crucial role in future developments of the economic and budgetary policies of Member States as does the need for more accountability, involvement of national parliaments, and proper instruments for the European Parliament to hold the European Commission to account for the performance of the European semester.