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A report from the Commission finds public finances to be more sustainable than they were at the onset of the financial crisis, under the effects of pension reforms and fiscal consolidation in particular. However significant challenges remain, mainly because of debt accumulated during the crisis years and projected public spending increases due to population ageing.
The fiscal sustainability report, published by the Commission every three years, provides an overview of the challenges faced by member states in the short, medium and long term.
The Council called on member states, especially those at high sustainability risk over the medium term, to focus on sustainability- and growth-oriented fiscal strategies. It called for further analysis of demographic developments, including the effect of large migration flows on economic conditions and public finances.
To meet the fiscal sustainability challenge, the Council advocated a three-pronged strategy consisting of:
- reducing government debt;
- increasing productivity and employment;
- reforming pension, health care and long-term care systems.