New EU budgetary rules approved by MEPs | News

The new rules, approved on Tuesday, were provisionally agreed between the European Parliament and member state negotiators in February.

Focus on investments

MPs have significantly strengthened the rules to protect a government’s investment capacity. It will now be more difficult for the Commission to place a Member State under an excessive deficit procedure if essential investments are underway, and all national expenditure on co-financing EU-funded programs will be excluded from the calculation of expenditure for a government, thereby creating more incentives. invest.

Ensuring the credibility of the rules – mechanisms for reducing the deficit and debt Over-indebted countries will be required to reduce it by an average of 1% per year if their debt is greater than 90% of GDP, and by 0.5% per year on average if it is between 60% and 90%. If a country’s deficit is above 3% of GDP, it will need to be reduced during periods of growth to 1.5% and build a spending reserve to cope with difficult economic conditions.

More space to breathe

The new rules contain various provisions to allow more breathing space. In particular, they grant three additional years compared to the standard four years to achieve the objectives of the national plan. MEPs agreed that this additional time could be granted for any reason the Council deemed appropriate, rather than only if specific criteria were met, as initially proposed.

Improve dialogue and ownership

At the request of MEPs, countries with deficits or excessive debt can request a discussion process with the Commission before it provides guidance on the spending trajectory. This would give the government more opportunities to make its case, particularly at this crucial stage of the process. . A Member State may request that a revised national plan be submitted if there are objective circumstances preventing its implementation, for example a change of government.

The role of independent national fiscal institutions, responsible for verifying the relevance of their government’s budgets and fiscal projections, was significantly strengthened by MPs, with the aim being that this increased role would help strengthen national buy-in to the plans.

Quotes from the co-rapporteurs

Markus Ferber (EPP, DE) said: “This reform represents a new start and a return to budgetary responsibility. The new framework will be simpler, more predictable and more pragmatic. However, the new rules can only be successful if they are properly implemented by the Commission.”

Margarida Marques (S&D, PT) said: “These rules offer more room for investment, more flexibility for Member States to facilitate their adjustments and, for the first time, they guarantee a “real” social dimension. Exempting co-financing from the spending rule will enable new and innovative policies to be developed within the EU. We now need a permanent investment tool at European level to complement these rules.”

The texts were adopted as follows:

Regulation establishing the new preventive aspect of the Stability and Growth Pact (PSC): 367 votes for, 161 votes against, 69 abstentions;

Regulation modifying the corrective aspect of the SGP: 368 votes for, 166 votes against, 64 abstentions, and

Directive amending the requirements relating to the budgetary frameworks of the

Member States: 359 votes for, 166 votes against, 61 abstentions.

Next steps

The Council must now give formal approval to the rules. Once adopted, they will enter into force on the day of their publication in the Official Journal of the EU. Member States will have to submit their first national plans by September 20, 2024.

Background – how the new rules will work

All countries will provide medium-term plans outlining their spending targets and how investments and reforms will be undertaken. Member States with high deficit or debt levels will receive pre-plan guidance on spending targets. To ensure spending is sustainable, numerical benchmark guarantees have been introduced for countries with excessive debt or deficit. The rules will also add a new objective, namely to encourage public investment in priority areas. Finally, the system will be more adapted to each country, on a case-by-case basis, rather than applying a universal approach, and will better take into account social concerns.