Madame chair, Honourable members!
It is a pleasure to be back in the European Parliament and it's my first engagement in Parliamentary Committee in the new Commission's mandate, so looking forward to a good cooperation.
This year's European Semester Autumn package represents the first step in implementing the EU's economic governance reform: the most ambitious and comprehensive reform that we have made since the global financial crisis more than a decade ago.
The new fiscal rules, to which the Parliament contributed and adopted earlier this year, 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 European priorities.
The cornerstone of the new fiscal rules is the medium-term fiscal-structural plan that each Member State must prepare. National ownership is a very important keyword of the new rules: the plans respond to a set of common rules, but have been prepared by the Member States themselves taking into account their challenges and priorities.
Each medium-term plan sets out a country's fiscal path, its priority investments and growth-enhancing reforms in the coming years.
So far as it has been said, 22 Member States have submitted their plans.
Five plans will be submitted at a later stage 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. 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.
Looking at individual Member States more closely, in the case of the Netherlands, however, the Commission proposes to endorse the net expenditure path consistent with the technical information that was transmitted in June.
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, we know – because we definitely need to invest, and a great deal, to address current challenges as well as to support and boost growth.
And here we have been successful here as well.
Five Member States have chosen a more gradual seven-year adjustment path, allowing them to undertake the necessary fiscal effort over a longer period. 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.
Moreover, RRF implementation has contributed to raising public investment to its highest levels in more than a decade.
For the euro area as a whole, public investment (nationally financed, as well as RRF and other funds) will further increase from 3.4% of GDP this year to 3.5% in 2025.
Overall, we foresee a slightly contractionary fiscal stance for next year: around one-quarter of GDP. After several years of fiscal expansion, we believe that such a fiscal stance is appropriate.
Let me turn now to other parts of this year's Autumn package.
First, recommendations to correct excessive deficits.
This concerns eight Member States: Belgium, France, Italy, Hungary, Malta, Poland, Romania and Slovakia.
The Commission, as you know, delayed issuing corrective fiscal paths until now so that we could align with each country's medium-term fiscal plan.
For the most countries it was the case, we were 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's plan arrived late and is still being assessed, the Commission is proposing for those countries a corrective path based on a reference trajectory we provided in June, updated taking into account latest developments.
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 is already planned 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 excessive deficit procedure.
Nonetheless, the Austrian authorities have expressed their intention to take necessary action to bring the budget deficit below 3% of GDP already next year. The Commission stands ready to assess these new measures as soon as formally agreed and sufficiently detailed.
Finally, let me turn to the Draft Budgetary Plans for 2025 submitted by euro area Member States.
Those examine whether the planned net expenditure growth is in line with the trajectory of the first year of the medium-term plan. As such, it provides a first indication on the prospects for Member States to live up to the commitments of the new Economic Governance Framework.
It is positive that the next expenditure growth planned for 2025 as set out in the draft budget plan are for the most part, in line with the commitments and trajectory of the medium-term plans and the fiscal recommendations adopted by the Council in October. This is encouraging start.
Eight Draft Budgetary Plans are considered to be in line with the fiscal recommendations, meaning net expenditure plans for next year are fully consistent with the trajectory of their medium-term plans.
This is also the case for three other countries (Luxembourg, Malta, Portugal). Nonetheless, their Draft Budgetary Plans are 'not fully in line,' as they did not fully comply with the recommendation to phase out energy support measures.
Furthermore, the net expenditure plans are not fully in line with the fiscal recommendations for Estonia, Germany, Finland, and Ireland. Further, the net expenditure plan risks not being in line for Lithuania; and not in line for the Netherlands.
For Austria, Belgium and Spain, we will assess the Draft Budgetary Plan when they are submitted, linked to the timing of the draft budgets being tabled in the national parliaments.
To conclude, the adoption of this comprehensive package shows that we are starting to deliver on the objectives of the new framework that the Parliament and Council adopted earlier this year, with the objective of strengthening fiscal sustainability, as well as promoting sustainable and inclusive growth.
