Making the best use of the flexibility within the existing rules of the Stability and Growth Pact
ECON-VI/002
Making the best use of the flexibility within the existing rules of the Stability and Growth Pact
To make the views and concerns of the CoR heard on this topic, in particular towards the EP, and notably:
highlight that more involvement of LRAs is needed in economic governance
support the Commission's aim of flexibility in the SGP but ask for more (extension to corrective arm)
highlight the need for counter-cyclical effects in the current post-crisis context and widening regional disparities
point out the uneven nature of the fall in investment, and need for extra support for the weaker MS and regions
repeat call for ESIG co-funding to be excluded from defitict & debt rules
highlight that more involvement of LRAs is needed in economic governance
support the Commission's aim of flexibility in the SGP but ask for more (extension to corrective arm)
highlight the need for counter-cyclical effects in the current post-crisis context and widening regional disparities
point out the uneven nature of the fall in investment, and need for extra support for the weaker MS and regions
repeat call for ESIG co-funding to be excluded from defitict & debt rules
This opinion had a limited impact, in part because of timing: the European Parliament chose to deal with the Communication within a broader report started 6 months before its publication, meaning the CoR could not catch up.
Nevertheless there were some contacts at working level between the CoR & the EP rapporteur's team which seem to have born some fruit. Ms Berès herself tabled several amendments to her report to acknowledge the role of local and regional authorities in economic governance, in particular in relation to its democratic legitimacy – a key point of the CoR opinion.
Additionally, MEP Hugues Bayet tabled an amendment to the Committee Report (Am.284, see here) directly derived from a point of the opinion:
5a. Suggests, in light of the fact that 16 of the 28 country-specific recommendations contained provisions relating explicitly to the competences of local and regional authorities, that these authorities should be more involved in line with the partnership principle governing the structural funds;
Indeed point 18 of the CoR opinion reads:
[…]The Committee would therefore recommend that local and regional authorities be more closely involved in the framework of the European Semester, along the lines of the partnership principle governing the Structural Funds
Unfortunately this amendment was not adopted.
The final text, for its part, takes on also the issue of a need for LRA involvement, specifically in points 13 & 31:
13.Underlines the importance of simple and transparent procedures for economic governance and warns that the current complexity of the framework as well as the lack of implementation and ownership is detrimental to its effectiveness and acceptance by national parliaments, local authorities, social partners and citizens in Member States;
31.Invites the Commission and the Council to better articulate the fiscal and macroeconomic frameworks to allow for earlier and more consistent debate among all stakeholders […], deliberation by national parliaments and the role of social partners or of local authorities regarding the ownership of sustainable and socially balanced structural reforms;
In addition, the final text of the EP resolution also raises questions regarding growth potential calculation and the 1/20 rule – which are also prominent issues raised by the CoR opinion.
Nevertheless there were some contacts at working level between the CoR & the EP rapporteur's team which seem to have born some fruit. Ms Berès herself tabled several amendments to her report to acknowledge the role of local and regional authorities in economic governance, in particular in relation to its democratic legitimacy – a key point of the CoR opinion.
Additionally, MEP Hugues Bayet tabled an amendment to the Committee Report (Am.284, see here) directly derived from a point of the opinion:
5a. Suggests, in light of the fact that 16 of the 28 country-specific recommendations contained provisions relating explicitly to the competences of local and regional authorities, that these authorities should be more involved in line with the partnership principle governing the structural funds;
Indeed point 18 of the CoR opinion reads:
[…]The Committee would therefore recommend that local and regional authorities be more closely involved in the framework of the European Semester, along the lines of the partnership principle governing the Structural Funds
Unfortunately this amendment was not adopted.
The final text, for its part, takes on also the issue of a need for LRA involvement, specifically in points 13 & 31:
13.Underlines the importance of simple and transparent procedures for economic governance and warns that the current complexity of the framework as well as the lack of implementation and ownership is detrimental to its effectiveness and acceptance by national parliaments, local authorities, social partners and citizens in Member States;
31.Invites the Commission and the Council to better articulate the fiscal and macroeconomic frameworks to allow for earlier and more consistent debate among all stakeholders […], deliberation by national parliaments and the role of social partners or of local authorities regarding the ownership of sustainable and socially balanced structural reforms;
In addition, the final text of the EP resolution also raises questions regarding growth potential calculation and the 1/20 rule – which are also prominent issues raised by the CoR opinion.
The European Committee of the Regions,
- supports the Commission's aim of making the best possible use of flexibility in the interpretation of the existing provisions of the Stability and Growth Pact (SGP) in order to ensure, not least, that it has the necessary counter-cyclical effects in the current context of sluggish growth, a very high average level of unemployment in the EU and a trend towards widening regional disparities resulting from the uneven nature of the collapse in investment, which has mainly affected the weakest countries; considers that this should be a long-term objective, extending beyond the time scale of the Investment Plan that is the subject of this opinion;
- considers that the conditions imposed on the application of flexibility, including the fact that flexibility is essentially limited to the preventive arm of the SGP, are too restrictive to be applied consistently across the whole of the European Union and to have a real impact on Member States' and local and regional authorities' investment capacity and do not allow for the degree of underinvestment at national or regional level; therefore believes that flexibility in the area of investment should be extended to all the Member States, and calls on the Commission to make proposals to this end;
- points out that the CoR has called consistently for public spending by Member States and local and regional authorities under Structural and Investment Fund co-financing not to be included among national or equivalent structural expenditure as defined in the SGP, without other conditions, given that this investment is by definition of general European interest and has a proven leverage effect when it comes to sustainable growth.
- supports the Commission's aim of making the best possible use of flexibility in the interpretation of the existing provisions of the Stability and Growth Pact (SGP) in order to ensure, not least, that it has the necessary counter-cyclical effects in the current context of sluggish growth, a very high average level of unemployment in the EU and a trend towards widening regional disparities resulting from the uneven nature of the collapse in investment, which has mainly affected the weakest countries; considers that this should be a long-term objective, extending beyond the time scale of the Investment Plan that is the subject of this opinion;
- considers that the conditions imposed on the application of flexibility, including the fact that flexibility is essentially limited to the preventive arm of the SGP, are too restrictive to be applied consistently across the whole of the European Union and to have a real impact on Member States' and local and regional authorities' investment capacity and do not allow for the degree of underinvestment at national or regional level; therefore believes that flexibility in the area of investment should be extended to all the Member States, and calls on the Commission to make proposals to this end;
- points out that the CoR has called consistently for public spending by Member States and local and regional authorities under Structural and Investment Fund co-financing not to be included among national or equivalent structural expenditure as defined in the SGP, without other conditions, given that this investment is by definition of general European interest and has a proven leverage effect when it comes to sustainable growth.
