Proposal for a Council Regulation amending Regulation (EC) No 1467/97 on speeding up and clarifying the implementation of the excessive deficit procedure

Summary:

Legislative initiative tabled by the European Commission on 26 April 2023, introducing amendments to Regulation (EC) No 1467/97 concerning the implementation of the Excessive Deficit Procedure (EDP).

Further information:

The Stability and Growth Pact (SGP) is the cornerstone of the European Union's (EU) budgetary discipline. The corrective arm of the Pact governs the Excessive Deficit Procedure (EDP) which underpins the prompt correction of excessively high public deficits or excessively high public debt. Regulation (EC) No 1467/97 is included in the SGP and it seeks to clarify and speed up the EDP. This framework was later amended by Regulation (EU) No 1175/2011 to take into account the lessons of the global financial crisis and the Euro area sovereign debt crisis, as part of the so-called Six-Pack.

Article 17a of Regulation (EC) No 1467/97 contains a review clause whereby every five years the European Commission is required to publish a report on the application of the Regulation. The latest review was carried out as part of a wider review of the EU's economic governance framework launched in 2020. The review revealed a number of strengths and shortcomings, in particular an increased complexity, the need to be more effective in reducing debt where it is high and build buffers for future shocks, and the need to update a number of instruments and procedures so as to integrate the lessons learned from the policy responses to the latest economic shocks.

In November 2022, the Commission put forward its orientations for a reform of the EU's economic governance framework. These envisaged a stronger national ownership, a simplified framework and a move towards a great medium-term focus, combined with stronger and more coherent enforcement. The draft law retains the rules for the opening and closing of an EDP for breaches of the 3% GDP deficit reference value, with some adjustments to ensure consistency with the EDP for breaches of the debt criterion, which would be strengthened for both activation and abrogation.

The proposed Council Regulation was adopted by the European Commission on 26 April 2023 as part of a legislative package seeking to reform the EU's fiscal framework. The European Parliament's relevant committee adopted its report on the draft law on 11 December. The Council of the European Union adopted its general approach to the text on 21 December. In the framework of the special consultation procedure, an informal agreement between the two institutions on the text for the draft law was reached on 10 February 2024.

Official

European Parliament: Legislative Observatory: Procedure File for Proposal on Excessive deficit procedure: speeding up and clarifying the implementation (2023/0137(CNS)) https://oeil.secure.europarl.europa.eu/oeil/popups/ficheprocedure.do?lang=en&reference=2023/0137(CNS)

European Parliament: Legislative Train Schedule: Review of the economic governance framework (CWP 2023) https://www.europarl.europa.eu/legislative-train/theme-an-economy-that-works-for-people/file-economic-governance-review-(cwp-2023)

European Commission: Economy and Finance: Economic and fiscal governance https://economy-finance.ec.europa.eu/economic-and-fiscal-governance_en

European Commission: Press Release, 26/04/2023: Commission proposes new economic governance rules fit for the future https://ec.europa.eu/commission/presscorner/detail/en/ip_23_2393

European Commission: Questions and answers: Commission proposes new economic governance rules fit for the future (26 April 2023) https://ec.europa.eu/commission/presscorner/detail/en/qanda_23_2394

European Commission: Remarks by Executive Vice-President Dombrovskis and Commissioner Gentiloni at the press conference on the review of the EU's economic governance framework (26 April 2023) https://ec.europa.eu/commission/presscorner/detail/en/speech_23_2467

European Parliament: Press Release, 11/12/2023: Economic governance reform: improving credibility, ownership and scope for investment https://www.europarl.europa.eu/news/en/press-room/20231207IPR15733/

Council of the European Union: Press Release, 21/12/2023: Economic governance review: Council agrees on reform of fiscal rules https://www.consilium.europa.eu/en/press/press-releases/2023/12/21/economic-governance-review-council-agrees-on-reform-of-fiscal-rules/

Council of the European Union: Press Release, 10/02/2024: Economic governance review: Council and Parliament strike deal on reform of fiscal rules https://www.consilium.europa.eu/en/press/press-releases/2024/02/10/economic-governance-review-council-and-parliament-strike-deal-on-reform-of-fiscal-rules/

European Commission: Press Release, 10/02/2024: Commission welcomes political agreement on a new economic governance framework fit for the future https://ec.europa.eu/commission/presscorner/detail/en/ip_24_711

European Parliament: Press Release, 10/02/2024: Deal on EU economic governance reform https://www.europarl.europa.eu/news/en/press-room/20240205IPR17419/

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ESO Records

Review of the European Union’s economic governance framework https://www.europeansources.info/record/review-of-the-european-unions-economic-governance-framework/

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