Regions and cities want national and regional investments required for EU cohesion policy projects excluded from debt calculation
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- Economic governance (EU)
- Tax system
Stability and Growth Pact must remain suspended until a revised fiscal framework is in place
The European Committee of the Regions (CoR) has called for changes to European fiscal rules to make them more effective and increase their democratic legitimacy, in an opinion led by Elio Di Rupo (BE/PES), Minister-President of Wallonia.
The recommendations by the EU’s cities and regions come in response to proposals presented by the European Commission in April 2023 to reform the EU’s economic governance and the Stability and Growth Pact (SGP). The reforms aim to strengthen public debt sustainability and promote sustainable and inclusive growth in the face of higher energy prices, high inflation, and the effects of the COVID-19 pandemic and Russia’s invasion of Ukraine.
Rapporteur Di Rupo said: “While in 2022, 19 out of the 27 Member States had either a debt above 60% GDP or an annual deficit of more than 3%, the existential question is simple: is the new economic governance at the service of a better European future? We support the approach of gradually reducing the public debt of the most indebted countries, while providing the necessary fiscal space for public investment in the climate and digital transitions. Secondly, the rules imposed must recognise the specificity of national and regional situations while ensuring fair treatment of all Member States. Finally, specific treatment should be given to national or regional co-financing of all projects co-financed by the EU, such as cohesion projects.”
The Committee highlights that activating the general escape clause of the SGP at the start of the COVID-19 pandemic was an essential step that enabled the European response to the crisis at every level. If the Pact comes back into force within the current economic governance framework, the debt reduction required would lead to a return to austerity policies, with severe economic, social and environmental consequences, and a negative impact on fiscal sustainability itself. The CoR therefore calls for the general escape clause to remain in effect until a revised economic governance framework is put in place.
Finally, regional and local leaders regret that the European Semester - the EU’s framework for the coordination and surveillance of economic and social policies - is unable to consistently consider a territorial differentiation of challenges and opportunities within Member States and lacks efficacy in terms of the reforms’ implementation.
To make the European Semester more effective in promoting inclusive growth, the CoR has put forward a proposal for a code of conduct to ensure that local and regional authorities are structurally involved in its implementation. The CoR has also welcomed the ‘Greening the European Semester’ initiative proposed by the European Commission, and is ready to proactively contribute to its success.
Contact:
Hélène Dressen
Tel. +32 471 50 27 95
Matteo Miglietta
Tel. +32 470 89 53 82