{"id":151096,"date":"2024-04-30T12:02:10","date_gmt":"2024-04-30T10:02:10","guid":{"rendered":"https:\/\/www.cde.ual.es\/?p=151096"},"modified":"2024-04-30T12:30:05","modified_gmt":"2024-04-30T10:30:05","slug":"eu-economic-governance-review-council-adopts-reform-of-fiscal-rules","status":"publish","type":"post","link":"https:\/\/www.cde.ual.es\/en\/eu-economic-governance-review-council-adopts-reform-of-fiscal-rules\/","title":{"rendered":"EU economic governance review: Council adopts reform of fiscal rules"},"content":{"rendered":"

The Council adopted three pieces of legislation that will reform the EU\u2019s economic and fiscal governance framework.<\/span><\/p>\n

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The main objective of the reform is to ensure\u00a0sound and sustainable public finances<\/strong>, while promoting\u00a0sustainable and inclusive growth<\/strong>\u00a0in all member states through\u00a0reforms and investment<\/strong>.<\/span><\/p>\n

“The new legislation will significantly improve the existing framework and provide effective and applicable rules for all EU countries. They will safeguard balanced and sustainable public finances, increase the focus on structural reforms and investments to spur growth and job creation throughout the EU. The time is now for a swift implementation” says <\/span>Vincent Van Peteghem, Deputy prime minister and minister of finance of Belgium<\/span><\/p>\n

The\u00a0reform\u2019s overall objective<\/strong>\u00a0is to reduce debt ratios and deficits in a gradual, realistic, sustained and growth-friendly manner, while protecting reforms and investments in strategic areas such as digital, green or defence. At the same time, the new framework will provide appropriate room for counter-cyclical policies and help address existing macroeconomic imbalances.<\/span><\/p>\n

Preventive measures for sound public finances<\/span><\/h2>\n

Under the new rules, all member states will be asked to prepare a national medium-term fiscal structural plan that spans over 4-5 years, depending on the length of the national legislature. In their plans, member states commit to a multi-year public net expenditure path and explain how they will deliver investments and reforms that respond to the main challenges identified in the context of the European Semester, in particular in the country-specific recommendations.<\/span><\/p>\n

Ahead of this, the Commission will submit\u00a0a \u2018reference trajectory\u2019<\/strong>\u00a0for net expenditure developments to member states where government debt exceeds the 60% of gross domestic product (GDP) or where the government deficit exceeds the 3% of GDP.<\/span><\/p>\n

The reference trajectory, takes into account each country\u2019s specific sustainability challenges and indicates how member states can ensure that by the end of a\u00a0fiscal adjustment period\u00a0<\/strong>of four years, government debt is put or remains on a plausibly downward path or stays at prudent levels over the medium-term.<\/span><\/p>\n

The new rules contain two safeguards that the reference trajectory must comply with:<\/span><\/p>\n