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S&Ds welcome legislative proposals for reform of EU fiscal rules, but regret lack of permanent fiscal capacity and social dimension


26 Apr 2023


Euro & Finance

The S&Ds welcome the long-awaited legislative proposals for the much-needed reform of the EU fiscal rules presented today by the European Commission. It is positive in that the proposals foresee more flexibility for strategic investments and allow for different member states' debt reduction paths. However, the Group regrets that the proposed reform does not include a permanent fiscal capacity at EU level. Moreover, the Socialists and Democrats will fight for more social ambition in the new economic governance framework.

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

“The EU needs to reform its outdated and inefficient fiscal rules without any further delay. A swift makeover of the fiscal rules is key to avoid the return to austerity as well as to meet green and social goals. We welcome the fact that we finally have legislative proposals for this much-needed reform. We are particularly pleased with more flexibility for investment, as a necessary alternative to a failed austerity policy.

“However, we are concerned about the lack of social dimension. A new economic governance framework must be guided by the European Pillar of Social Rights with key targets on poverty reduction, quality job creation, and a highly skilled labour force. To achieve this, national fiscal and budgetary plans must ensure that no social regression will be caused by their reforms, and social investment should be excluded from the excessive deficit calculation. Only like this we can ensure social progress for the people in Europe.” 

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

“Today’s legislative proposals for the reform of EU fiscal rules are very good news, but there is an important element missing – a permanent fiscal capacity at EU level that would be based on the success of SURE* and the Recovery and Resilience Facility instruments. This would ensure necessary crisis preparedness. This is also the only way to guarantee that all member states have the means to undertake investments needed for the necessary modernisation of the EU economy.

“Last, but not least, we also need to strengthen democratic accountability and involvement of the European Parliament, national parliaments, and social partners. The European Parliament must be fully involved in these processes, as an equal partner.” 

Note to editors:

*SURE is the European instrument for temporary support to mitigate unemployment risks in an emergency.