The Commission welcomes the provisional political agreement between the European Parliament and the Council on reforming the EU's economic governance.
This ambitious agreement delivers on the objectives of the Commission's reform proposal to strengthen Member States' debt sustainability and to promote their sustainable and inclusive growth.
The revised fiscal rules will help to make the EU more competitive to strengthen its resilience to tackle the challenges that we face today as well as tomorrow.
It addresses several existing shortcomings. It places greater focus on reducing high debt ratios and deficits in a realistic, gradual and sustained way.
It also leaves more room for counter-cyclical policies and incentivises reforms and investments.
And it supports greater compliance with the rules. For example, by focusing Member States' plans – and their monitoring – on a single operational indicator based on net expenditure, we simplify implementation and avoid certain pro-cyclical bias that fiscal policy has had in the past.
Let me remind you of the key elements of the revised rules:
First, stronger national ownership and differentiation. At the core of the reform are the national medium-term fiscal-structural plans. These bring a country's fiscal, reform and investment policies together. Fiscal paths will become more differentiated, based on the degree of fiscal sustainability challenges. These changes will allow more scope for taking country-specific challenges and priorities into account.
Second, incentives for reforms and investments. Member States that commit to implementing priority reforms and investments will benefit from a more gradual fiscal adjustment path. Reforms should contribute to fiscal sustainability, promote sustainable and inclusive growth, and contribute to achieving common EU objectives.
These include pressing ahead with the green and digital transitions, strengthening Europe's security and defence and putting the principles of the European Pillar of Social Rights into effect.
Third, better enforcement and common safeguards. Rules are only fully effective if they go hand in hand with credible enforcement. This is why the greater leeway for Member States is constrained by a set of common EU safeguards to ensure transparency and equal treatment. The debt-based excessive deficit procedure will be strengthened, a control account will monitor slippages over time and more effective financial sanctions will enter into force.
Honourable Members
It has been a long journey to reach this point. The time has now come to start implementation.
We expect Member States to submit their medium-term fiscal-structural plans by 20 September. These will provide clarity around their fiscal policy for the years ahead and will set out key reforms and investments.
I look forward to this debate on this crucial topic for the EU's future resilience. Thank you very much.
