01 May, 2023

Stability and Growth Pact: Balancing flexibility and efficiency

The Renew Europe Group welcomed last week’s European Commission proposal for a review of the Stability and Growth Pact, a set of rules, suspended since 2020 and to be reactivated in 2024, intended to ensure that EU countries pursue sound public finances and coordinate their fiscal policies, while building confidence in the markets on the economic solidity of the Union. 

In light of events such as the COVID-19 pandemic and the full-scale Russian invasion of Ukraine, Renew Europe supports a review, but not complete overhaul, of the European economic governance model to make it fit for the current exceptional challenges and enhance the EU’s capacity to act in an increasingly volatile geopolitical context. 

In this regard, the Group upholds the Commission's proposal to set debt targets adapted to the economic situation of each European country, to give greater flexibility to EU Member States while ensuring evaluation, analysis and sustainability of the effectiveness and efficiency of public spending. 

Renew Europe strongly advocates to use this flexibility responsibly and smartly, to make progress on investment and structural reforms in such strategic areas as energy, defence, technology, education and the labour market, with lessons learned from the Next Generation EU funds. This will provide the EU with a better chance of growth and resilience in the wake of future economic shocks, while advancing the Union's open strategic autonomy. To this end, beyond the oversight role played by the Commission and independent national authorities, Renew Europe calls for improved economic governance with greater democratic scrutiny, in which the European Parliament plays a more important role. 

Stéphanie Yon-Courtin MEP (L’Europe Ensemble, FR), Renew Europe Coordinator on the European Parliament Economic and Monetary Affairs Committee, stated: 

“The review of our fiscal rules is of upmost importance to make them clear, simple, tailored for each Member State in order to allow growth-enhancing investments to pursue the twin transition and EU strategic autonomy. The spirit of the initial EU communication must be preserved as past crisis demonstrated that "one size fits all" austerity policies are not the adequate answer."  

Morten Løkkegaard MEP (Venstre, DK), Renew Europe Vice-President and Coordinator of the working group on Economy and Digital Transformation of the Renew Europe Group in the European Parliament, said: 

"We are facing a huge challenge: Too many Member States are struggling with crippling debt, which leaves us all extra vulnerable in case of new crisis. We have an urgent need to reform the Stability and Growth Pact to ensure that countries actually bring down their state debt and deficits, while also granting them more flexibility. Without stifling growth or strategically important investments, we need ambitious debt reduction plans, which respects the fundamental principles of the Pact. Furthermore, we also need more transparency in the process to allow for proper scrutiny of enforcement of the plans.” 

Photo credit © European Union 2022 - Source : EP 

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