EU Economic Governance Proposal Reform: Issues and Insights from EU IFIs
The Network welcomes the publication of the European Commission Communication on Orientations for a Reform of the EU Economic Governance Framework on 9 November 2022 .
The Network supports the objective to reach a consensus on reform ahead of Member States’ budgetary processes for 2024. The extended reliance on the “exceptional circumstances” clauses risks undermining EU and national fiscal frameworks, which could make it increasingly difficult to return to a rules-based approach at a time when public debt is high.
This note raises key issues and offers some insights based on EU independent fiscal institutions’ expertise and experience in fiscal policy in EU countries. It draws on the Network’s “EU Fiscal and Economic Governance Review: Contribution from the Network of Independent EU Fiscal Institutions” (Network of EU IFIs, 2021) and subsequent papers on the “Potential Role of National IFIs in the EU Framework” (Network of EU IFIs, 2022a) and the “Capacity of IFIs” (Network of EU IFIs, 2022b). These called for a three-pillar strategy based on: (1) a numerical rules-based approach, (2) an enhanced role for national independent fiscal institutions (IFIs) and (3) improved statistical information.
The Network of EU IFIs takes no position on the Commission’s overall proposal as this raises fundamental questions beyond the scope of the work of the Network of EU IFIs and IFI mandates that need to be addressed on a political level. This note focusses on fiscal governance rather than wider economic governance issues.