The Committee on Economic and Monetary Affairs adopted the own-initiative report by Pervenche BERÈS (S&D, FR) on the review of the economic governance framework: stocktaking and challenges.
Whilst welcoming the Commission Communication of 28 November 2014 on the economic governance review, the committee stressed the fact that the current economic governance framework needs to be implemented and where necessary improved to: (i) deliver fiscal stability, to favour a proper debate on the overall assessment of the euro area as a whole allowing growth friendly fiscal responsibility; (ii) improve economic convergence perspective of the euro area; (iii) address on an equal footing Member States' different economic and fiscal situations.
Members insisted that the current framework is complex and it suffers from a lack of ownership at national level and limited attention to the international economic perspective and appropriate democratic accountability mechanism. They underlined the importance of simple and transparent procedures for economic governance.
Best application of flexibility within the existing rules: the report welcomed the interpretative communication on flexibility within the existing rules of the Stability and Growth Pact (SGP). Members supported:
- all the incentives proposed by the European Commission to finance the new European Fund for Strategic Investments (EFSI), mainly by making national contributions to the fund fiscally neutral as regards to the attainment of the MTO and to the required fiscal adjustment effort without modifying it in the preventive or the corrective arm of the Stability and Growth Pact;
- the Commission's intention to refrain from launching an Excessive Deficit Procedure (EDP) if, only because of the additional contribution to the EFSI, a Member State deficit goes slightly and temporarily beyond the 3% deficit limit;
- that the Commission communication aims at clarifying the scope of the investment clause, allowing for a certain degree of temporary flexibility in the preventive arm of the SGP, in the form of a temporary deviation from the Medium Term Objective (MTO), provided the deviation does not lead to an excess over the 3% deficit reference value and an appropriate safety margin, to accommodate investment programmes by the Member States.
Closer coordination, economic convergence and streamlining of the European Semester: the report urged the Commission to fully apply the SGP and ensure its fair implementation. Members supported the Commission three-pillar strategy (growth-enhancing investments, fiscal consolidation and structural reforms), presented in the AGS 2015 and asked to make it more concrete under the overall assessment of the budgetary situation and prospects in the euro area and in the Country Specific Recommendations.
Members made the following recommendations:
- streamline and reinforce the European Semester within the current legislative framework;
- the Commission and the Council should better articulate the fiscal and macroeconomic frameworks to allow for earlier and more consistent debate among all stakeholders taking into account: (i) the European interests served by these frameworks, (ii) the need to increase convergence between euro area Member States, (iii) deliberation by national parliaments and the role of social partners or of local authorities regarding the ownership of sustainable and socially balanced structural reforms;
- the Annual Growth Survey (AGS) as well as the country-specific recommendations (CSR) must be better implemented and take into account the assessment of the budgetary situation and prospects both in the euro area as a whole and in the individual Member States;
- the Country Specific Recommendations (CSRs) should be, where relevant, better coordinated with the Excessive Deficit Procedure (EDP) recommendations so as to ensure consistency;
- the elaboration, follow-up, support and monitoring of Country Specific Recommendations should be enhanced;
- the Commission should take account, in its analyses all important factors, including real growth, inflation, long term public investment and unemployment rates when evaluating the economic and fiscal situations of Member States.
Democratic accountability and challenges ahead: Members stressed that a major role must be played by institutions subject to democratic accountability. They recalled the European Parliament's resolutions specifying that the creation of the European Stability Mechanism (ESM) and of the Treaty on Stability, Coordination and Governance ('Fiscal Compact') outside of the structure of the institutions of the Union represents a setback to the political integration of the Union.
The stakeholders are invited to take into account the foreseeable future enlargement of the euro area and to explore all options to deepen and strengthen the EMU, such as:
- enhanced democratic accountability mechanisms at both the EU and national levels, whereby responsibilities must be assumed at the level where decisions are taken and based on the adoption of convergence guidelines under co-decision;
- formalising the scrutiny role of the European Parliament in the European Semester in an Inter-Institutional Agreement;
- ensuring that all euro area National Parliaments follow each step of the European Semester process;
- a social dimension aimed at preserving Europe's social market economy, respecting the right to collective bargaining;
- a euro area fiscal capacity based on specific own-resources which should, in the framework of the Union budget with European parliamentary control, assist Member States in the implementation of the agreed structural reforms;
- increasing the resilience of the EMU to face economic shocks and emergencies directly connected to the monetary union;
- the inclusion of the European Stability Mechanism and the Treaty on Stability, Coordination and Governance (TSCG) in Union law.
Members recalled their request to develop options for a new legal framework for future macroeconomic adjustment programmes, replacing the Troika, in order to increase the transparency and ownership of these programmes and ensure that all EU decisions are, where possible, taken under the Community method.