The European Union is undertaking a comprehensive review of its economic governance framework, to address longstanding criticisms, respond to the impact of COVID-19, and prepare for the challenges posed by the twin green and digital transitions.
This Discussion Paper represents
the final instalment of an EPC Task Force series that examined the
current approach and proposes 10 concrete policy recommendations to make
EU economic governance stronger, greener and fairer:
This Discussion Paper draws on the insights of the EPC’s Task Force on Rethinking EU Economic Governance.
The contents and views expressed are entirely the work of the authors
and should not be interpreted as representing the views of any Task
Force member. Policy Briefs on the Stability and Growth Pact, the European Semester and the Recovery and Resilience Facility, and social investment have already been published. Read the full paper here.
- Establish a central investment capacity for green and digital
investments (including associated social investments) or, alternatively,
a golden rule modelled on the governance of the Recovery and Resilience
- Introduce a single net expenditure rule with a country-specific debt
target based on nationally designed expenditure and debt plans to
enhance political ownership.
- Shift to a multiannual supervision and assessment framework and
introduce fixed medium-term budgetary plans, with a control account
- Reform the sanctions regime to increase proportionality, perceived fairness and political enforceability.
- Differentiate country-specific supervision based on a clear risk threshold.
- Introduce ‘National Reform and Investment Plans’ modelled on the
National Recovery and Resilience Plans, using a commitments-based
approach to operationalise social, fiscal, macroeconomic and structural
country-specific recommendations. The plans’ components with strong
links to fiscal sustainability should govern the use of Stability and
Growth Pact (SGP) flexibilities.
- Reform the Stability and Convergence Programmes (SCPs) to focus more
on the investment composition of national fiscal plans and their link
to broader policy objectives.
- Introduce an opinion on the individual and joint impact of the SCPs
on imbalances into the Macroeconomic Imbalances Procedure to strengthen
its link with the SGP.
- Introduce new processes into the European Semester to assess
non-macroeconomic structural risks, such as climate and environmental
- Build on the success of the temporary Support to mitigate
Unemployment Risks in an Emergency (SURE) programme to create
insurance-based mechanisms to support national fiscal policy during
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