Good afternoon, ladies and gentlemen. Today's package is a watershed moment for the European Semester.
It represents the first step in carrying out the EU's economic governance reform: the most ambitious and comprehensive that we have made since the global financial crisis more than a decade ago.
The new fiscal rules will help to strengthen fiscal sustainability, as well as promote sustainable and inclusive growth.
They will improve the coordination of economic and fiscal policies across Member States and allow them to achieve common policy priorities, in particular:
- strengthening economic and social resilience,
- advancing with the green and digital transitions,
- and bolstering Europe's security capacity.
This will require structural reforms and massive investments, both private and public, so that Europe can tackle structural and emerging challenges – and also boost its competitiveness.
All this against a backgroun of high public debt in a number Member States, which now needs to be reduced.
Since EU governments provided sizeable support to households and businesses affected first by the pandemic, and then by high energy prices, Member States emerged from these crises with more elevated debt and deficit levels.
The cornerstone of the new fiscal rules is the medium-term fiscal-structural plan that each Member State must draw up. It sets out a country's fiscal path, its priority investments and growth-enhancing reforms for the coming years.
Each plan reflects common European priorities and the country-specific recommendations issued as part of the European Semester. The paths will take into account the fiscal position of each country, with a focus on lowering public debt where it is high.
The Commission has been working hard with Member States to devise their plans in the best possible way, according to each national situation and in line with the new fiscal rules.
I am pleased to say that 22 Member States have now submitted their plans.
Five plans will be submitted at a later date due to national elections or new governments being formed. These are the plans from Austria, Belgium, Bulgaria, Germany and Lithuania.
The Commission has issued an assessment for 21 of the plans that have arrived so far. Hungary's plan was only submitted on November 4 and is still being assessed.
We found that 20 plans set out a credible fiscal path to ensure fiscal sustainability over the medium term.
The Commission therefore proposes that the Council should endorse the fiscal path set out in these plans.
In the case of the Netherlands, however, the Commission proposes to endorse the net expenditure path consistent with the technical information that it transmitted in June.
With nearly all plans positively assessed, one can say that the new system is working well. It shows that the approach envisaged, based on a country's ownership of its fiscal policy, has been successful.
More broadly, let me add that while it is clearly the time for fiscal adjustment, it should not lead to cuts in public investment. This is quite a difficult balance to strike – because we definitely need to invest, and a great deal, to address current challenges as well as to support and boost growth.
And we have been successful here as well.
Five Member States have chosen a more gradual seven-year adjustment path. These are Finland, France, Italy, Spain and Romania.They have committed to additional investments and reforms that will boost their growth potential and improve fiscal sustainability – also by helping them to achieve common EU priorities.
We expect public investment to continue increasing next year in almost all Member States.
At this point, I should highlight the Recovery and Resilience Facility.
This massive investment and reform programme is an important part of the story as well. RRF implementation has taken public investment to its highest in more than a decade.
Let me turn now to other parts of today's package. First, excessive deficit procedures.
This concerns eight Member States: Belgium, France, Italy, Hungary, Malta, Poland, Romania and Slovakia.
The Commission delayed issuing corrective fiscal paths until now so that this could align with each country's medium-term fiscal plan. For most countries involved, we have been able to base the corrective paths on those set out in these Member States' respective plans.
Since Belgium has not yet submitted a plan and Hungary was late in submitting its plan, the Commission is proposing for those countries a corrective path based on a reference trajectory we provided in June.
We also analysed this year's breaches of the 3% of GDP reference value for deficit in Austria and Finland.
For Finland: there is no need to open an excessive deficit procedure at this stage, since its deficit next year will already be below 3% of GDP.
In the case of Austria, its deficit is currently projected to remain above 3% of GDP in the coming years. On this basis, the Commission will consider opening an EDP.
Nonetheless, the Austrian authorities have expressed their intention to take necessary action to bring the budget deficit below 3% of GDP next year.
The Commission stands ready to assess these new measures as soon as formally agreed and sufficiently detailed.
Today, we also took decisions on euro area Member State draft budgetary plans, and Commissioner Gentiloni will inform you about this.
Before I conclude, I would like to take this opportunity to thank you, Paolo, for your solid work and cooperation during this mandate. It was a pleasure to work with you during these difficult times, when neither of us could have expected the many challenges that we had to deal with. And thank you for your valuable and significant contribution to reforming the EU's economic governance, whose first results we are seeing today.
