THE EUROPEAN COMMITTEE OF THE REGIONS
supports a convergence strategy that would complement existing European policies to strengthen economic, social and territorial cohesion and build on the following proposals: i) creating euro area fiscal capacity, including preparations for accession to the euro area, to establish incentives to promote social and macroeconomic convergence; ii.) turning part of the European Stability Mechanism (ESM) into an integrated non-monetary European instrument; iii) establishing a convergence code supplemented by a system of incentives for structural reforms, the scope of which would be defined according to their European added value;
is opposed to euro area fiscal capacity being made a euro area budget heading in the EU budget while the own resources ceiling remains fixed at 1.23% of EU GNI. In this scenario the amount of capacity would be completely inadequate for providing aid for structural reforms, playing a stabilising role, acting as a backstop for the Banking Union and serving as an instrument for pre-accession assistance for Member States not using the euro. There would also be a risk of a crowding out effect on EU policy financing such as the ESIF;
calls for genuine democratic involvement of the European Parliament and consultation of the CoR and the social partners prior to adopting country-specific recommendations under the European Semester;
considers that the February 2016 Council agreement on flexible application of the Stability and Growth Pact (SGP) should also be confirmed in EU primary law. The CoR reiterates, in this context, its calls for public investment by local and regional authorities and ESIF co-financing not to be included in structural expenditure.