16 March 2023

Economic governance framework: Council agrees its orientations for a reform

Acknowledges the call from the European Council to the Commission and the Council for swiftly advancing the work on the economic governance review, taking into account the European Council February 2023 Conclusions. Recognises that a review of the existing framework could increase its effectiveness.

The Council of the European Union:

1. Recalls that member states shall regard their economic and fiscal policies as a matter of common concern and shall coordinate them within the Council, in line with the Treaty. Underlines that the EU economic governance framework is crucial for effective economic policy coordination and surveillance across the EU, ensuring for all member states, the soundness and sustainability of public finances over the medium- and long term, promoting sustainable economic growth and convergence, and addressing macroeconomic imbalances, supported by growth- and resilience enhancing reforms and investments.

2. Acknowledges that the EU economy continued its strong post-pandemic recovery, not least thanks to the swift policy action at national and EU level. However, it faces multiple short- and long-term economic and social challenges resulting from increased geopolitical tensions, high inflation and increased interest rates, climate change, digitalisation, demographic change, the need to support competitiveness and strategic autonomy in an open economy, the importance of ensuring affordable energy and security of supply and the necessary build-up of defence capabilities. Many of these challenges require ambitious reforms and substantial investments. Moreover, the pandemic crisis as well as the consequences of the Russian war against Ukraine have contributed to further increases in already high debt levels, which need to be reduced in a gradual and realistic manner.

3. Welcomes the publication of the Commission Communication on 9 November 2022 on orientations for a reform of the EU economic governance framework. Acknowledges the call from the European Council to the Commission and the Council for swiftly advancing the work on the economic governance review, taking into account the European Council February 2023 Conclusions. Recognises that a review of the existing framework could increase its effectiveness.

4. Highlights that national ownership is an essential element of an effective economic governance framework. Acknowledges the benefits of moving towards multi-annual fiscal planning, while maintaining the annual surveillance cycle in the context of the European Semester. Recognises the need to take into account member states’ fiscal starting positions and outlook, as well as economic characteristics in differentiated fiscal paths. Stresses that simplifying the framework as well as preserving its multilateral character is important. Underlines the importance of equal treatment, transparency and predictability.

5. Highlights the following areas of convergence of views among member states on a reformed economic governance framework:...

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