What changed between the plenary report and the adopted text

Removed:DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

Added:P9_TA(2024)0311

Changed:on the proposal for a regulation of the European Parliament and of the Council the effectiveEffective coordination of economic policies and multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97

Removed:(COM(2023)0240 – C90150/2023 – 2023/0138(COD))

Added:Committee on Economic and Monetary Affairs

Added:PE754.668

Added:European Parliament legislative resolution of 23 April 2024 on the proposal for a regulation of the European Parliament and of the Council on the effective coordination of economic policies and multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97 (COM(2023)0240 – C9-0150/2023 – 2023/0138(COD))

8 unchanged paragraphs

(Ordinary legislative procedure: first reading)

The European Parliament,

– having regard to the Commission proposal to Parliament and the Council (COM(2023)0240),

– having regard to Article 294(2) and Article 121(6) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C90150/2023),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

– having regard to the opinion of the European Central Bank of 5 July 2023,

– having regard to the opinion of the European Economic and Social Committee of 21 September 2023,

– having regard to the opinion of the European Committee of the Regions of 10 October 2023,

Added:– having regard to the provisional agreement approved by the responsible committee under Rule 74(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 21 February 2024 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

6 unchanged paragraphs

– having regard to Rule 59 of its Rules of Procedure,

– having regard to the opinion of the Committee on Employment and Social Affairs,

– having regard to the report of the Committee on Economic and Monetary Affairs (A9-0439/2023),

1. Adopts its position at first reading hereinafter set out;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Change 1

Removed:AMENDMENTS BY THE EUROPEAN PARLIAMENT*

Added:P9_TC1-COD(2023)0138

Removed:to the Commission proposal

Added:Position of the European Parliament adopted at first reading on 23 April 2024 with a view to the adoption of Regulation (EU) 2024/… of the European Parliament and of the Council on the effective coordination of economic policies and on multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97

Removed:---------------------------------------------------------

Added:(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Regulation (EU) 2024/1263.)

Removed:2023/0138 (COD)

Removed:Proposal for a

Removed:REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

Removed:on the effective coordination of economic policies and multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97

Removed:THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Removed:Having regard to the Treaty on the Functioning of the European Union, and in particular Article 121(6) thereof,

Removed:Having regard to the proposal from the European Commission,

Removed:After transmission of the draft legislative act to the national parliaments,

Removed:Having regard to the opinion of the European Central Bank (footnote)

Removed:Acting in accordance with the ordinary legislative procedure,

Removed:Whereas:

Removed:(1) The coordination of the economic policies of the Member States within the Union, as provided for by the Treaty on the Functioning of the European Union (TFEU), entails compliance with the guiding principles of stable prices, sound public finances and monetary conditions and a sustainable balance of payments.

Removed:(2) The Stability and Growth Pact (SGP), which initially consisted of Council Regulation (EC) No 1466/97, Council Regulation (EC) No 1467/97 of 7 July 1997 and the Resolution of the European Council of 17 June 1997 on the Stability and Growth Pact, is based on the objective of sound and sustainable government finances as a means of strengthening the conditions for price stability and for strong sustainable growth underpinned by financial stability, thereby supporting the achievement of the Union’s objectives for sustainable and inclusive growth, quality employment and competitiveness.

Removed:(3) The fiscal governance framework, which is the subject matter of this Regulation, is a part of the European Semester, which also comprises the coordination and surveillance of broader economic, employment and relevant social policies of the Member States, in accordance with Articles 121 and 148 TFEU, including the European Pillar of Social Rights, and the related country-specific recommendations.

Removed:(4) The involvement of social partners, civil society organisations and other relevant stakeholders in the European Semester is key to ensure ownership and transparent and inclusive policy-making.

Removed:(5) The economic governance framework of the Union should be adapted to better take into account the growing heterogeneity of fiscal positions, public debt challenges and other vulnerabilities across Member States. The strong policy response to the COVID-19 pandemic proved highly effective in mitigating the economic and social damage of the crisis, but the crisis resulted in a significant increase in public- and private-sector debt ratios, underscoring the importance of reducing debt ratios to prudent levels in a gradual, sustained and growth-friendly manner and addressing macroeconomic imbalances, while paying due attention to employment and social objectives. At the same time, the economic governance framework of the Union should be adapted to help address the medium- and long-term challenges facing the Union including achieving a fair digital and green transition, including the Climate Law, ensuring energy security, open strategic autonomy, addressing demographic change, strengthening social and economic resilience and implementing the strategic compass for security and defence, all of which requires reforms and sustained high levels of investment in the years to come.

Removed:(6) The economic governance framework of the Union should put debt sustainability, investments and reforms, the common priorities of the Union and sustainable and inclusive growth and resilience, at its core and therefore differentiate between Member States by taking into account their public debt challenges and allowing country-specific fiscal trajectories, and ensure consistency within the Union as a whole, including the euro area.

Removed:(6a) Maintaining a high level of public investment is necessary in order to achieve the main objectives of the reform of the economic governance framework as laid down in this Regulation and addressing the current and future priorities of the Union. That framework could be strengthened by a common investment instrument at Union level. The lessons learned from the implementation of instruments such as SURE or NGEU could serve as inspiration for future instruments that aim to support the fiscal governance framework.

Removed:(7) The multilateral surveillance procedure set out in Article 121(2), (3) and (4) and Article 148(4) TFEU should monitor in accordance with more detailed rules the full range of economic and employment developments in each of the Member States and in the Union. That includes the detection of macroeconomic imbalances and the prevention and correction of excessive imbalances as set out in Regulations (EU) No 1174/2011 and (EU) No 1176/2011 of the European Parliament and of the Council. For the monitoring of such economic and employment developments, Member States should present information in the form of medium-term fiscal-structural plans.

Removed:(7a) Pursuant to Article 148(4) TFEU, the Commission, within the Social Convergence Framework, identifies risks to upward convergence for Member States in the Joint Employment report and subsequently publishes ‘Social Convergence Reports’ for those Member States which it has identified as facing risks to upward social convergence. The country-specific conclusions of the multilateral surveillance activities should provide input to the Commission’s country-specific recommendations.

Removed:(8) Detailed rules should therefore be laid down regarding the content, submission, assessment and monitoring of the national medium-term fiscal-structural plans, in order to promote debt sustainability, investments and reforms, the common priorities of the Union and sustainable and inclusive growth in the Member States and prevent the occurrence of excessive government deficits through medium-term planning.

Removed:(9) National medium-term fiscal-structural plans should bring together the fiscal, structural reforms and investment commitments of each Member State and these plans should be the cornerstone of the economic governance framework of the Union. Each Member State should present a medium-term plan that sets out its net expenditure path as well as priority public investment and reform commitments that together ensure sustained and gradual debt reduction and sustainable and inclusive growth, avoiding a pro-cyclical fiscal policy, as well as broader reform and investment commitments, including in relation to the European Green Deal,▌ the European Pillar of Social Rights, the Digital Decade Policy Programme 2030 and the Strategic Compass for Security and Defence. The national plans should also assess the public investment gaps, in particular to achieve those common Union priorities. During the lifetime of the Recovery and Resilience Facility, commitments undertaken in the national Recovery and Resilience Plans should be duly taken into account.

Removed:(10) Cohesion policy funds are also synchronised with the European Semester process. As the long-term investment policy of the EU budget, cohesion policy investments and reforms should also be duly taken into account in the drawing of the national medium-term fiscal-structural plans. Each Member State should also explain how its national medium-term fiscal-structural plan will ensure consistency and, where appropriate, complementarity, with the expenditure on EU programmes fully matched by EU funds revenue and the relevant national co-financing.

Removed:(11) The presentation of the national medium-term fiscal-structural plan should be preceded by a technical dialogue with the Commission to ensure compliance with the provisions of this Regulation as well as equal treatment of Member States. The technical dialogue should be properly documented for the purpose of transparency and accountability towards the European Parliament. On the basis of a recommendation from the Commission accompanied by an opinion of the European Fiscal Board (EFB) on the Union dimension and the original opinion of the national independent fiscal institution on the plan of the Member State concerned, the Council should set the net expenditure path and endorse the reform and investment commitments, including those taken for the possible extension of the adjustment period, as appropriate.

Removed:(12) In order to simplify the Union fiscal framework and increase transparency, a single operational indicator anchored in debt sustainability should serve as a basis for setting the fiscal path and carrying out annual fiscal surveillance for each Member State. That single operational indicator should be based on nationally financed net primary expenditure, that is to say government expenditure net of interest expenditure, discretionary revenue measures, ▌expenditure on programmes of the Union fully matched by Union funds revenue, national expenditure on co-financing of programmes funded by the Union capped at a limit of 0,25% of GDP, cyclical elements of unemployment benefit expenditure, and costs related to the borrowing of funds for the loans related to the national Recovery and Resilience Facility Plans. This indicator allows for macro-economic stabilisation as it is not affected by the operation of automatic stabilisers, including revenue and expenditure fluctuations outside the direct control of the government.

Removed:(13) To initiate the preparation of national medium-term fiscal-structural plans, the Commission should provide the underlying medium-term public debt projection framework based on the debt sustainability analysis methodology and macroeconomic forecast and assumptions for each Member State. For Member States with a public debt above the 60% of GDP reference value or a government deficit above the 3% of GDP reference value, a reference trajectory should be put forward to specify the minimum fiscal adjustment that brings the debt trajectory of the Member State on a plausibly downward path leading to sustainable debt reduction or maintains debt at a prudent level. ▌The sustainability of that debt reduction should result from appropriate fiscal policies.

Removed:(13a) For the preparation of the reference trajectory, the Commission and the Member State concerned should hold a dialogue to assess compliance of the trajectory with the provisions of this Regulation. As part of that dialogue, the Member State may decide to present a proposal for a trajectory to the Commission. If as a result of the dialogue, the Commission and the Member State concerned disagree on whether the proposal for a reference trajectory complies with the provisions of this Regulation, the Commission should put forward a reference trajectory meeting the requirements laid down in this Regulation.

Removed:(14) The reference trajectory ▌should also ensure that the government deficit is brought and maintained below the 3% of gross domestic product (GDP) reference value. It should also ensure that the public debt ratio stabilises over the adjustment period and is reduced every year over the projection period on average by at least one percentage point of debt to GDP for the Member States with a debt-to-GDP ratio exceeding 90% and at least half a percentage point for the Member States with a debt-to-GDP ratio of 60% to 90%.

Removed:(15) In order to assess whether further adjustments are required towards the end of the four-year implementation period of the national medium-term fiscal-structural plan, a new reference trajectory should be put forward ▌ if the public debt of the Member State is still above 60% of GDP reference value or its government deficit is higher than 3% of GDP reference value.

Removed:(16) Prior to the submission of the national medium-term fiscal-structural plan, each Member State should consult relevant stakeholders, including regional authorities, and annex the result of that consultation to the plan. Each national medium-term fiscal-structural plan should also mention its status in the context of national procedures, notably whether ▌there has been parliamentary approval of the plan and whether, if applicable, the national parliament had the opportunity to discuss the Council recommendation on the previous plan and▌ any other Council recommendation or decision, or any Commission warning.

Removed:(16a) A new government in a Member State may submit a new or revised national medium-term fiscal-structural plan to the Commission. However, if there are objective circumstances preventing the implementation of the plan, a Member State may request to submit a revised plan to the Commission by no later than 12 months before the end of the current plan. A new or revised national medium-term fiscal-structural plan should only attempt to reverse or remove investments present in the original plan if their removal does not result in unjustified additional costs for the Member State.

Removed:(17) When Member States use assumptions in their reference trajectory that differ from the Commission’s standard medium-term debt projection framework and macroeconomic forecast and assumptions, they should explain and duly justify the differences in a transparent manner and based on sound economic arguments, in the dialogue with the Commission on the reference trajectory.