The EU needs to reform its outdated and inefficient fiscal rules without any further delay, urged the S&Ds in reaction to today’s meeting of EU finance ministers who adopted a common position on parts of the necessary reforms. A swift makeover of the fiscal rules is key to avoid the return to austerity as well as to meet green and social goals.

Biljana Borzan MEP, S&D vice-president for economic matters, said: 

“The urgency of the reform cannot be overstated. For years, the EU has tried to revamp its harmful and dysfunctional fiscal rules. In the middle of the reform process, they had to be suspended to allow for adequate reaction, first to the pandemic and then to the war against Ukraine. Now, the reform needs to be finalised before the rules come back into force, which is foreseen at the end of this year. Otherwise, we risk the return to austerity. This would increase inequalities and undermine the transition to a sustainable economy”

“So time is of the essence now. Bridging the remaining gaps and translating agreements in principle into concrete and robust legislation before the General Escape Clause is lifted and fiscal rules are reactivated, is the only way to ensure a successful and socially-just transition to climate neutrality.”

Jonás Fernández MEP, S&D spokesperson on economic and monetary affairs, added: 

“In November 2022, the European Commission presented an outline of the reform. While its orientations continue to leave much room for uncertainties, they contain elements with an evident potential. They clearly show a concern for mobilising investment and for taking into account member states’ specificities. 

“However, there are challenges to which the Commission’s orientations have not responded. They lack proposals for a permanent fiscal capacity at EU level, although this is the only way to ensure that all member states have the means to undertake investments needed for the necessary modernisation of the EU economy. While the Recovery and Resilience Facility is plugging this hole for now, there will be a gaping void once the facility expires. We expect this to be taken into account in the legislative proposal that is long overdue. Last, but not least, the European Parliament must be fully involved in these processes, as an equal partner.”