The Economic and Social Council (CES) has released a report expressing concerns over the new European fiscal rules that were approved at the beginning of the year. The council believes that these rules do not fully address the issues faced by the previous system, as they are complex, procyclical, and lack protection for investments. To address these shortcomings, the CES recommends several actions, including achieving the Banking Union, deepening financial integration with the Capital Market Union, defining an industrial policy, and issuing joint public debt (eurobonds) to strengthen the EU’s resources system.
The CES also emphasizes the need for a new recovery fund to support technological and green investments in Europe. The report reflects on the new fiscal rules which aim to limit annual public deficits to 3% of GDP and keep public debt below 60%. The CES president, Antón Costas, believes that Europe must decide whether to adopt a rigid or compassionate approach within these fiscal rules, especially in light of the upcoming European Parliament elections.
The council highlights several areas where reform is needed in European mechanisms with budgetary capacity and investment mechanisms at the European level. Additionally, they call for balancing these new fiscal framework with monetary policy and completing the Banking Union to ensure financial stability and economic resilience in Europe. Moreover, they recommend deepening financial integration to advance the Capital Market Union and mobilize private capital for innovation and investments. Furthermore, they advocate for defining a common industrial policy to enhance EU’s competitiveness internationally while promoting economic activity while ensuring cohesion and territorial linkages. Lastly, they urge incorporating European human capital and addressing child poverty to achieve economic and social returns.
In conclusion, this report from CES serves as a call for action from policymakers in Europe to consider implementing recommendations that will help navigate complexities of new fiscal rules while promoting economic recovery, ensuring sustainable growth in Europe. By implementing these measures, Europe can strengthen its economic resilience support investments effectively compete globally.
