Changes from report parliamentary committee draft to plenary report

AddedNational medium-term fiscal-structural and budgetary plans

Added26. Notes that not all Member States were able to submit their national medium-term fiscal-structural and draft budgetary plans on time; notes that, as a result of general elections and the formation of new governments, five Member States have not yet submitted their national medium-term fiscal-structural plans and two Member States have not yet submitted their draft budgetary plans, while one Member State has not submitted its draft budgetary plan for other unspecified reasons; calls on these Member States to submit the relevant plans as soon as possible; underlines that the timely submission of these plans is a precondition for the effective implementation and credibility of the new rules; reaffirms the importance of the timely submission of draft budgetary plans to translate commitments outlined in fiscal plans into concrete policies following approval of the national medium-term fiscal-structural plans;

Added27. Recalls that the reforms and investments outlined in the national medium-term fiscal-structural plans should align with the EU’s common priorities as laid down in Regulation (EU) 2024/1263; emphasises that, under the new framework, the Commission should pay particular attention to these priorities when assessing the national medium-term fiscal-structural plans;

Added28. Acknowledges that 21 of the 22 national medium-term fiscal-structural plans that have been reviewed so far received a positive evaluation; notes that the new framework allows Member States to use assumptions that differ from the Commission’s DSA if these differences are explained and duly justified in a transparent manner and are based on sound economic arguments in the technical dialogue with the Member States; observes, however, that in the plans submitted by five Member States, the Commission found insufficiently justified inconsistencies and deviations from the DSA framework in macroeconomic assumptions related to potential GDP and/or the GDP deflator; stresses that such deviations and risks of backloading could potentially threaten future fiscal sustainability; notes that in the plans submitted by three Member States, the Commission acknowledges a concentration of the fiscal adjustment towards the end of the period; calls on the Commission to ensure that any such concentration of the adjustment meets the requirements set out in the regulation and calls on it to prevent procyclical policies;

Added29. Takes note of the fact that only seven Member States have sought an opinion from their relevant independent fiscal institution, which provides an important additional scrutiny dimension; notes with caution that some independent fiscal institutions gave a negative opinion on their Member State’s national fiscal plan; stresses that nine Member States did not meet their obligation to conduct political consultations with civil society, social partners, regional authorities and other relevant stakeholders prior to submitting their national plans; further regrets the fact that several Member States have not involved their national parliaments in the approval process for the plans and have not reported whether the required consultations with national parliaments took place as laid down in the new framework;

Added30. Observes that five Member States have requested an extension of the adjustment period; emphasises that any such extension should be based on a set of investment and reform commitments that, taken all together, improve the potential growth and resilience of the economy, support fiscal sustainability, address the EU’s common priorities and the relevant CSRs and have been assessed as meeting the conditions outlined in the regulation for such an extension; notes that the reforms and investments used to justify this extension rely considerably on reforms already approved under the RRF; highlights the importance of and need for reforms and investments that contribute positively to the potential GDP growth of the Member States; calls on the Commission to effectively evaluate ex post the impact of agreed investments and reforms in terms of supporting fiscal sustainability, enhancing the growth potential of the economy, addressing the EU’s common priorities and the CSRs and ensuring the required level of nationally financed public investment;

Added31. Notes the Commission’s assessment that only 8 of the 17 draft budgetary plans presented are in line with fiscal recommendations stemming from the national medium-term fiscal-structural plan; regrets the fact that 7 plans were assessed as not being fully in line with the recommendations, 1 as non-compliant and 1 as at risk of not being in line with the recommendations; is concerned that six Member States have presented draft budgetary plans with annual or cumulative expenditure growth above their prescribed ceilings;

AddedFiscal stance and the role of fiscal policy in the provision of European public goods

Added32. Notes the Commission’s projection that the implementation of the revised governance framework is expected to lead to a reduction of the primary structural balance for the euro area as a whole of 0.5 % of GDP in 2024 and 0.25 % of GDP in 2025; notes the Commission’s assessment that this is in line with the process of enhancing fiscal sustainability and support the ongoing disinflationary process as economic uncertainty remains high; notes that GDP growth will continue to support fiscal consolidation throughout the EU; calls for fiscal policies that restore stability while promoting innovation, industrial competitiveness and long-term economic growth; stresses the need to create additional fiscal space to tackle future challenges and potential crises while preserving a sufficient level of investment to support and foster sustainable and inclusive growth, industrialisation and prosperity for all;

Added33. Considers that the effective implementation of the fiscal rules, although necessary, is not in itself sufficient to achieve the optimal fiscal stance at all times and ensure a high standard of living for all Europeans; notes that the fiscal stance is still projected to differ greatly from one Member State to another in 2025; calls on the Commission to explore ideas for a mechanism that helps ensure that the cyclical position of the EU as a whole is appropriate for the macroeconomic outlook at all times;

Added34. Recalls that, according to the Commission, the fiscal drag in 2025 will be partly offset by a slight expansion in investment, financed both by national budgets and by RRF grants and other EU funds; emphasises the RRF’s role in addressing EU investment needs, noting that it will expire by the end of 2026, which might lead to a decrease in public investment in common European priorities;

Added35. Calls on the Commission to initiate discussions on addressing the significant investment gap in the EU and to reduce borrowing costs, strengthen financial stability and enable strategic investments in line with the EU’s objectives and for the provision of European public goods, such as defence capabilities to match needs in a context of growing threats and security challenges; calls for full use to be made of the efficiency gains that may stem from the provision of European public goods at EU scale through the effective coordination of investment priorities among Member States; believes that this framework, where appropriate, should be strengthened by EU-level investment instruments and tools designed to minimise the cost for EU taxpayers and maximise efficiency in the provision of European public goods;

Added36. Recalls that any EU funding must be accompanied by robust controls ensuring transparency, accountability and the efficient use of funds, so as to avoid unjustified increases in public spending;

Added37. Encourages the Member States to promote investment spending that produces a positive rate of return; acknowledges the Draghi report’s assessment that around four fifths of productive investments will be undertaken by the private sector in the EU, while public investment will also play a catalysing role; welcomes the Commission initiative to propose a competitiveness fund under the new multiannual financial framework and calls on it to make full use of financial guarantees to leverage private investment; stresses that the Member States must step up their efforts, in particular budgetary efforts, to accelerate innovation, digitalisation, education, training and decarbonisation, to strengthen European competitiveness and to reduce dependencies;

Country-specific recommendations

Change 6

Removed18. Laments the fact that the rate of ‘fully implemented’ country-specific recommendations (CSRs) has dropped from 18.1 % (in the period 2011-2018) to 13.9 % (in the period 2019-2023);

Added38. Notes that the share of ‘fully implemented’ CSRs has dropped from 18.1 % (in the period 2011-2018) to 13.9 % (in the period 2019-2023); recalls that implementing CSRs, including with regard to the efficiency of public spending, is a key part of ensuring fiscal sustainability and addressing macroeconomic imbalances; advocates a more efficient implementation of the CSRs and the relevant reforms; calls for ways of increasing the share of ‘fully implemented’ CSRs to be explored; calls on the Commission to link the CSRs more closely to the respective country reports; calls for the impact of reforms and the progress towards reducing identified investment gaps to be evaluated; calls for greater transparency in the preparation of CSRs;

Removed19. Recalls the Member States’ obligation to address the relevant CSRs under the European Semester in their national fiscal plans;

Added39. Reiterates, in this regard, that CSRs should be enhanced by focusing on a limited set of challenges, in particular specific Member States’ structural challenges and the EU’s common priorities, with a view to promoting sound and inclusive economic growth, enhancing competitiveness and macroeconomic stability, promoting the green and digital transitions and ensuring social and intergenerational fairness;

Removed20. Highlights the fact that implementing CSRs on strengthening the fiscal sustainability of public pension systems and the cost-effectiveness of health and long-term care systems in the face of ageing populations should remain a key objective for the Member States;

Added40. Recalls the Member States’ commitment to address, in their national fiscal plans, the relevant CSRs in both their economic and social dimensions, as expressed under the European Semester; notes that the Commission has found unaddressed CSRs in the national fiscal plans;

Added41. Highlights the importance of the CSRs in tackling the longer-term drivers of fiscal sustainability, including the sustainability and proper provision of public pension systems, the healthcare and long-term care systems in the face of demographic challenges such as ageing populations, and preparedness for adverse developments, including climate-change-related physical risks; stresses the relevance of CSRs in addressing the stability of the housing market in order to contribute to the economic resilience of the EU;

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