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report parliamentary committee draft, 27 November 2024

On the European Semester for economic policy coordination 2025

Document ECON-PR-766678 · (2024/2112(INI))

Committee on Economic and Monetary Affairs · Rapporteur: Fernando Navarrete Rojas

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AI:In short

This draft report on the European Semester for economic policy coordination 2025 notes the EU's resilience and calls for responsible fiscal policies, structural reforms, and productivity-enhancing investments. It expresses concern over high debt levels and excessive deficits in eight Member States, and stresses the need for rigorous implementation of the revised EU economic governance framework. The report criticizes delays in submitting national fiscal plans, deviations from expenditure paths, and lack of consultations, and calls on the Commission to prevent procyclical policies. It agrees with the Eurogroup on the need for gradual fiscal consolidation in 2025 and calls for a mechanism to ensure an appropriate cyclical fiscal stance for the EU. It laments the drop in fully implemented country-specific recommendations and reminds Member States to address them, especially on pension and healthcare sustainability.

Position. The rapporteur proposes a resolution that notes the EU's resilience, calls for fiscal consolidation and structural reforms, stresses rigorous enforcement of the new governance framework, and urges timely submission of national plans and implementation of country-specific recommendations.

Key points

  1. Notes the EU's resilience and calls for responsible fiscal policies, structural reforms, and investments that increase productivity.
  2. Believes that overcoming competitive and geopolitical challenges requires transferring expenditure to the EU level for European public goods, including defence.
  3. Highlights that a consistent industrial policy is vital to increase investments in innovation while preserving competitiveness and the single market.
  4. Notes the Commission's forecast of EU GDP growth of 0.9% in 2024 and 1.5% in 2025, with risks tilted to the upside.
  5. Concerned that public debt ratios are projected to rise to 83.0% in the EU and 89.6% in the euro area in 2025.
  6. Regrets that eight Member States have excessive deficits and welcomes remedial action.
  7. Recalls that the reform aims to make the framework simpler, more transparent, and effective, with greater national ownership and better enforcement.
  8. Deplores low past enforcement and stresses the need for equal treatment and rigorous implementation of the new framework.
  9. Regrets that not all Member States submitted their national plans on time and that some delayed fiscal adjustments to the end of the period.
  10. Calls on the Commission to ensure sound economic arguments for deviations and to prevent procyclical policies.
  11. Laments that only seven Member States sought an opinion from independent fiscal institutions and that several did not consult regional authorities or parliaments.
  12. Agrees with the Eurogroup on the need for gradual fiscal consolidation in 2025 and calls for a mechanism to ensure an appropriate cyclical fiscal stance.

Who is affected

  • Member States: must submit national fiscal plans on time, consult stakeholders, and implement country-specific recommendations.
  • The Commission: must ensure sound economic arguments for deviations and prevent procyclical policies.
  • The Council: called on to propose a mechanism for an appropriate cyclical fiscal stance.

Figures and deadlines

  • EU GDP growth expected at 0.9% in 2024 and 1.5% in 2025.
  • Euro area GDP growth expected at 0.8% in 2024 and 1.3% in 2025.
  • Public debt ratio projected to rise to 83.0% in the EU and 89.6% in the euro area in 2025.
  • Public debt ratio in 2024: 82.4% for the EU and 89.1% for the euro area.
  • Eight Member States have excessive deficits.
  • Rate of fully implemented country-specific recommendations dropped from 18.1% (2011-2018) to 13.9% (2019-2023).

Legal basis. Articles 121, 126 and 136 of the Treaty on the Functioning of the European Union

Written by AI from the full text · every figure comes from the text · ¶ opens the paragraph · 4 Sept 2026 · Report a problem

Full text

Motion for a european parliament resolution 71 paragraphs

(2024/2112(INI))

The European Parliament,

–having regard to the Treaty on the Functioning of the European Union (TFEU), in particular Articles 121, 126 and 136 thereof,

–having regard to Protocol No 1 to the Treaty on European Union (TEU) and the TFEU on the role of national parliaments in the European Union,

–having regard to Protocol No 2 to the TEU and the TFEU on the application of the principles of subsidiarity and proportionality,

–having regard to Protocol No 12 to the TEU and the TFEU on the excessive debt procedure,

–having regard to the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union,

–having regard to Regulation (EU) 2024/1263 of the European Parliament and of the Council of 29 April 2024 on the effective coordination of economic policies and on multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/97,

–having regard to Council Regulation (EU) 2024/1264 of 29 April 2024 amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure,

–having regard to Council Directive (EU) 2024/1265 of 29 April 2024 amending Directive 2011/85/EU on requirements for budgetary frameworks of the Member States,

–having regard to Regulation (EU) No 1173/2011 of the European Parliament and of the Council of 16 November 2011 on the effective enforcement of budgetary surveillance in the euro area,

–having regard to Regulation (EU) No 1174/2011 of the European Parliament and of the Council of 16 November 2011 on enforcement measures to correct excessive macroeconomic imbalances in the euro area,

Read the rest (59 paragraphs)

–having regard to Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances,

–having regard to Regulation (EU) No 472/2013 of the European Parliament and of the Council of 21 May 2013 on the strengthening of economic and budgetary surveillance of Member States in the euro area experiencing or threatened with serious difficulties with respect to their financial stability,

–having regard to Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013 on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area,

–having regard to the Commission’s Spring 2024 Economic Forecast of 15 May 2024,

–having regard to the Commission’s Autumn 2024 Economic Forecast of 15 November 2024,

–having regard to the Commission’s Debt Sustainability Monitor 2023 of 22 March 2024,

–having regard to the Commission communication of 8 March 2023 entitled ‘Fiscal policy guidance for 2024’ (COM(2023)0141),

–having regard to the Commission report of 19 June 2024 prepared in accordance with Article 126(3) of the Treaty on the Functioning of the European Union (COM(2024)0598),

–having regard to Council Decision (EU) 2024/2122 of 26 July 2024 on the existence of an excessive deficit in France,

–having regard to Council Decision (EU) 2024/2123 of 26 July 2024 on the existence of an excessive deficit in Hungary,

–having regard to Council Decision (EU) 2024/2124 of 26 July 2024 on the existence of an excessive deficit in Italy,

–having regard to Council Decision (EU) 2024/2125 of 26 July 2024 on the existence of an excessive deficit in Belgium,

–having regard to Council Decision (EU) 2024/2128 of 26 July 2024 on the existence of an excessive deficit in Malta,

–having regard Council Decision (EU) 2024/2129 of 26 July 2024 on the existence of an excessive deficit in Slovakia,

–having regard to Council Decision (EU) 2024/2133 of 26 July 2024 on the existence of an excessive deficit in Poland,

–having regard to Council Decision (EU) 2024/2130 of 26 July 2024 establishing that no effective action has been taken by Romania in response to the Council Recommendation of 18 June 2021,

–having regard to the Council Recommendation of 12 April 2024 on the economic policy of the euro area,

–having regard to the European Fiscal Board assessment of 3 July 2024 on the fiscal stance appropriate for the euro area in 2025,

–having regard to the Eurogroup statement of 15 July 2024 on the fiscal stance for the euro area in 2025,

–having regard to the European Fiscal Board annual report of 2 October 2024,

–having regard to the Commission communication of 19 June 2024 entitled ‘2024 European Semester - Spring Package’ (COM(2024)0600),

–having regard to International Monetary Fund working paper 24/181 of August 2024 entitled ‘Taming Public Debt in Europe: Outlook, Challenges, and Policy Response’,

–having regard to the International Monetary Fund’s Fiscal Monitor entitled ‘Putting a Lid on Public Debt’ of October 2024,

–having regard to Rule 55 of its Rules of Procedure,

–having regard to the opinion of the Committee on Budgets,

–having regard to the report of the Committee on Economic and Monetary Affairs (A100000/2024),

A.whereas the European Semester plays an essential role in coordinating economic and budgetary policies in the Member States;

B.whereas reference values of up to 3 % of government deficit and 60 % of debt to GDP are defined by the TFEU; whereas the EU’s headline deficit and government debt-to-GDP ratio remain above the reference values;

C.whereas compliance with the expenditure rule under the previous framework in the euro area (2011-2023) was 52 %;

D.whereas excessive deficit procedures were opened, or kept open, for eight Member States in 2024; whereas some Member States were not subject to an excessive deficit procedure, despite having a deficit above 3 % of GDP in 2023;

E.whereas the Commission concluded in June 2024 that eight Member States had exceeded the recommended expenditure growth levels in 2023;

1.Notes that, in the last few years, the EU has demonstrated a high degree of resilience in the face of major shocks, among other factors, thanks to a coordinated policy response; further recalls that promoting sustainable growth in a sustained manner means promoting responsible fiscal policies, structural reforms and investments that increase productivity;

2.Believes that overcoming competitive and geopolitical challenges will require the transfer of expenditure to the EU level in certain policy areas related to European public goods to increase the efficiency of overall public expenditure; welcomes the Union’s commitment to increasing its spending efficiency and investments in overall defence capabilities to match its needs in the context of rising threats and security challenges;

3.Highlights the fact that a consistent and comprehensive industrial policy is vital to increase investments in the EU’s innovation capacity, while preserving competitiveness and the integrity of the single market;

Economic prospects for the EU

4.Notes that, according to the Commission’s autumn 2024 economic forecast, EU GDP is expected to grow by 0.9 % (0.8 % in the euro area) in 2024 and by 1.5 % (1.3 % in the euro area) in 2025; notes that the economic outlook for the EU remains highly uncertain, with risks largely tilted to the upside;

5.Stresses that high debt levels undermine economic stability and the capacity to respond to crises; is concerned that the public debt ratio is projected to increase (to 83.0 % in the EU and 89.6 % in the euro area) in 2025, up from the levels in 2024 (82.4 % for the EU and 89.1 % for the euro area);

6.Regrets the fact that eight Member States have excessive deficits and welcomes remedial action;

7.Notes that the Commission’s 2024 Alert Mechanism Report identifies macroeconomic imbalances in 12 Member States;

Revised EU economic governance framework and its effective enforcement

8.Recalls that the reform aims to make the framework simpler, more transparent and effective, with greater national ownership and better enforcement; recalls, furthermore, that it aims to strengthen fiscal sustainability through gradual and tailor-made adjustments complemented by reforms and investments and to promote countercyclical fiscal policies;

9.Deplores the low level of enforcement of the fiscal rules framework in the past; stresses that it is essential for the new framework to ensure the equal treatment of the Member States; affirms that a successful and credible framework relies heavily on its rigorous implementation;

10.Affirms that a renewed focus on medium-term net expenditure will require comprehensive reforms of national budgetary planning procedures across the Member States;

National fiscal and budgetary plans

11.Regrets that not all Member States were able to submit their national medium-term fiscal-structural and draft budgetary plans on time; underlines that this constitutes a major setback for the effective implementation of the new rules and their credibility; reaffirms the importance of the timely submission of draft budgetary plans to translate commitments outlined in fiscal plans into concrete policies;

12.Notes that 18 Member States have proposed deviations from the expenditure path determined by the Commission, resulting, in some cases, in higher average expenditure growth; laments the fact that these deviations are justified on the basis of significant discrepancies between Member States’ economic assumptions and those of the Commission; calls on the Commission to ensure that economic arguments underpinning the new paths proposed by Member States are sound and data-driven; regrets that Member States are delaying their fiscal adjustments to the end of the period, coinciding with slower GDP growth; calls on the Commission to prevent procyclical policies;

13.Laments the fact that only seven Member States have sought an opinion from their relevant independent fiscal institution; regrets that nine Member States did not meet their obligation to conduct political consultations with regional authorities and relevant stakeholders prior to submitting their national plans; further laments the fact that several Member States have not involved their national parliaments in the approval process for the plans and have not reported whether the required consultations with national parliaments took place;

14.Observes that five Member States have requested an extension of the adjustment period; notes that the reforms and investments used to justify this extension rely heavily on reforms already approved under the Recovery and Resilience Facility; believes that some of these reforms do not sufficiently meet the requirement to demonstrate their contribution to potential GDP growth;

Fiscal stance

15.Agrees with the Eurogroup that, given the macroeconomic outlook for 2025, gradual and sustained fiscal consolidation in the euro area continues to be necessary; highlights the need to reduce the high levels of deficit and debt in a way that minimises the impact on growth;

16.Notes that the implementation of the revised governance framework is expected to lead to a contractionary fiscal stance for the euro area as a whole in 2024 and 2025, which is appropriate in light of the macroeconomic outlook and the need to continue to enhance fiscal sustainability and support the ongoing disinflationary process;

17.Considers that the rigorous application of the fiscal rules themselves is not a sufficient condition for achieving an optimal fiscal stance at all times; calls on the Commission and the Council to propose a mechanism that helps ensure that the cyclical position for the EU as a whole is at all times appropriate to the macroeconomic outlook;

Country-specific recommendations

18.Laments the fact that the rate of ‘fully implemented’ country-specific recommendations (CSRs) has dropped from 18.1 % (in the period 2011-2018) to 13.9 % (in the period 2019-2023);

19.Recalls the Member States’ obligation to address the relevant CSRs under the European Semester in their national fiscal plans;

20.Highlights the fact that implementing CSRs on strengthening the fiscal sustainability of public pension systems and the cost-effectiveness of health and long-term care systems in the face of ageing populations should remain a key objective for the Member States;

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21.Instructs its President to forward this resolution to the Council and the Commission.

Explanatory statement 6 paragraphs

The European Semester remains a cornerstone for coordinating economic and budgetary policies across Member States within the European Union. The report acknowledges the EU’s resilience in managing recent crises and shocks, enabled by a coordinated policy response that has fostered stability and growth. Maintaining this momentum requires renewed attention to responsible fiscal policies, structural reforms, and productivity-enhancing investments. The report also underscores the budgetary pressures stemming from new demands linked to competitiveness, geopolitical challenges and population ageing. In response, the rapporteur advocates for i) a structural reform agenda, ii) fiscal sustainability and, iii) increase of public expenditure efficiency by means of shifting certain expenditures to the EU level to create European public goods in areas such as defense. Additionally, fostering innovation through a robust, horizontal industrial policy is deemed essential for preserving competitiveness and safeguarding the integrity of the single market.

The report recognizes that the economic outlook for 2024 and 2025 is clouded by uncertainty, with risks predominantly tilted to the downside. The rapporteur expresses concern over the projected rise in the EU’s debt-to-GDP ratio, which poses risks to economic stability and limits fiscal space to react negative shocks and crisis. Effective remedial action is needed to address excessive deficits in eight Member States, and the report welcomes ongoing efforts to correct these imbalances.

A key focus of the report is the functioning of the newly adopted macroeconomic governance framework, which has been in effect since 2024. This framework represents the most significant development in the economic coordination process. The reform aims to establish a simpler, more transparent, and effective system that strengthens fiscal sustainability while promoting counter-cyclical policies. However, the rapporteur highlights the historically weak implementation of fiscal rules in the European Union and stresses that credibility hinges on rigorous application and the equitable treatment of all Member States.

The report specifically addresses the introduction of new national mid-term fiscal-structural plans and Draft Budgetary Plans. It expresses concern over delays in submission by several Member States, which undermine the credibility of the process. The rapporteur also highlights discrepancies in economic assumptions between some Member States and the Commission, which have led to deviations in proposed expenditure paths. Additionally, the report warns against concentrating fiscal adjustments at the end of the adjustment period and calls on the Commission to ensure counter-cyclical policies. The lack of consultation with key stakeholders, including Independent Fiscal Institutions, regional authorities, and national parliaments, is also criticized. The rapporteur emphasizes the need to ensure that reforms and investments included in the plans genuinely contribute to potential GDP growth.

The report concurs with the Eurogroup’s agreement on the need for a sustained fiscal consolidation in 2025, which will result in a contractionary fiscal stance. While this approach is appropriate given the macroeconomic outlook, the report cautions that the mere application of fiscal rules is necessary but insufficient to achieve optimal macroeconomic outcomes. It calls on the Commission and the Council to establish mechanisms ensuring that the aggregate fiscal stance in the EU is responsive to cyclical conditions.

Finally, the rapporteur underscores the importance of implementing Country-Specific Recommendations (CSRs) as a critical element of the European Semester. In addition, the report raises concerns about the declining rate of “fully implemented” CSRs. Member States are reminded of their responsibility to integrate CSRs into their national fiscal plans, particularly in priority areas such as pension system sustainability and healthcare expenditure efficiency.

Annex: entities or persons from whom the rapporteur has received input 4 paragraphs

Pursuant to Article 8 of Annex I to the Rules of Procedure, the rapporteur declares that he has received input from the following entities or persons in the preparation of the draft report:

Entity and/or person

The list above is drawn up under the exclusive responsibility of the rapporteur.

Where natural persons are identified in the list by their name, by their function or by both, the rapporteur declares that he has submitted to the concerned natural persons the European Parliament’s Data Protection Notice No 484 (https://www.europarl.europa.eu/data-protect/index.do), which sets out the conditions applicable to the processing of their personal data and the rights linked to that processing.