The reform of the Stability and Growth Pact’s fiscal rules has entered a new phase with its approval this week. The European Parliament voted 431 in favor, 172 against and 4 abstentions to set a negotiating position. While the timetable for a political agreement between the Parliament and the Council is reasonable, MEPs indicate a desire to modify the rules endorsed by the European Council. Ecofin leaders softened the outcome last December by removing new targets and allowing more time to reduce debt.
“Parliament’s stance brings more flexibility for the investments needed to support the union’s key priorities,” said Esther De Lange, a popular MEP and the report’s rapporteur. “We call for greater flexibility and more time to lower costs and debt. We oppose new budget deficit targets and new austerity measures at the final negotiation stage to prevent a veto from any member state,” added Margarida Marques, describing the position she will defend in the inter-institutional talks starting this week.
“The positions are quite different and will require discussion to reach agreement. Yet progress must be made. Clarity in economic governance is essential, and the EU’s credibility is at stake,” commented Vincent van Peteghem, Belgian finance minister, after the Ecofin meeting. He noted that the Council’s stance seeks a delicate balance among all member states and acknowledged only a few weeks remain to finalize it. Foreign Minister Haja Lahbib stressed the same urgency.
Corrected program
If the EU aims to strike an agreement within this term, inter-institutional negotiators must conclude talks within the first two weeks of February at the latest. Only then will both the European Parliament and the Council have sufficient time to process the texts and complete official translations before the dissolution of the European Parliament for elections scheduled for June 6 to 9. If no agreement is reached in time, existing rules would apply, but speakers emphasized that any plan from the three institutions would be preferable to returning to the old framework. The parliamentary agreement progressed with support from a broad coalition including reformists, socialists, liberals and conservatives.
The Belgian EU presidency and the commissioner for economic affairs, Paolo Gentiloni, have accepted the tight timetable. Like most of Parliament, they believe the proposal on the table is preferable to the current rules. Gentiloni highlighted four points that must be kept: shifting to a risk-based approach to guarantee a realistic and sustainable debt reduction, strong incentives for sustainable growth, greater national ownership, and a reliable implementation mechanism.
The Commission has pledged to facilitate negotiations but emphasized that time is limited. With European elections approaching, it is important to deactivate the general escape clause and to reintroduce the existing rules in order to finalize the file and ensure clarity and predictability in fiscal policy. The aim remains a reform framework that supports gradual debt reduction while allowing substantial public investments needed by the union.
Source notes indicate several key elements to preserve credibility and ensure consistent fiscal governance across member states. The agreement process continues against a backdrop of a changing geopolitical environment, with a shared objective of maintaining prudent debt dynamics and enabling the scale of investments required for the union’s growth and resilience. (Source: European Parliament discussions and EU Council statements)