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S&Ds secure progressive austerity-proof deal on reform of EU fiscal rules

Date

11 Dec 2023

Sections

Global Europe

Today, the European Parliament’s economic committee is set to adopt its stance on the long-awaited and much-needed reform of EU fiscal rules. The Socialists and Democrats expect support for a deal with a strong progressive signature that will shield European people and companies against austerity, bolster investments and boost the social dimension of the new rules*.

To achieve these goals, the EU needs to overhaul its outdated and inefficient fiscal rules without further delay. Therefore, after today's committee vote, the S&Ds hope for a swift finalisation of the process in the Parliament, and then for constructive and smooth negotiations with EU member states with the aim of having the final agreement on the new rules by the end of this legislative term.

Margarida Marques, MEP and European Parliament’s co-rapporteur on the reform of EU fiscal rules, said:

The agreement testifies that the S&D Group rejects the return to austerity policies and pushes for credible and flexible rules that support European citizens and companies. 

Our priority is to place investment on an equal footing with debt reduction. Preventing the inclusion of any deficit benchmark and providing more fiscal space for member states to implement social, climate, digital and defence priorities of the EU are some of the Groups main achievements.

The agreement also paves the way for the strengthening of this new framework with an EU investment instrument, which would ensure the full realisation of its objectives. Even with more fiscal space, not all member states will have the capacity to invest on a level playing field. That is why in 2026, we need a new fiscal capacity for the post-Recovery and Resilience Facility period.

The upcoming negotiations with EU member states and the Commission will be challenging. We believe that we have a set of balanced proposals that reinforce the social, investment and democratic dimension of the new rules.”

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

The expected agreement shows our Group's determination to open a new chapter and turn the page on austerity. It strengthens the social dimension of the economic governance framework and gives member states sufficient room for manoeuvre in terms of investment, which will enable them to tackle the development of key priorities for our future, such as the Green Deal, the digital transition and the European Pillar of Social Rights.

The next step will be inter-institutional negotiations with EU member states, which we expect to be very tough.

*Note to editors:

A summary of the main S&D achievements during the demanding negotiations with other political groups in the European Parliament:

  • To stave off austerity, the S&Ds secured a counter-cyclical approach that will help alleviate potential negative effects of the economic cycle. For example, when the economy slows down, governments would have more flexibility to address negative consequences, as well as to secure the financing of social and environmental policies.
  • Investments will be bolstered by introducing the investment clause that will allow countries to deviate from the debt rules in case of significant investments in four priorities  climate and digital transition, defence and the social pillar.
  • The new rules will have a strong social imprint through the introduction of the social convergence framework. In practice, this means that member states will have to coordinate social policies to prevent socio-economic challenges. This brings our social targets on an equal footing with economic targets.
  • The S&Ds have also ensured an ambitious look forward – this reform paves the way for introducing a permanent fiscal capacity that would serve as a truly ambitious generator of public investment in the future.

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