Source: European Parliament
The reform of the Stability and Growth Pact[1] that entered into force last year foresees scope to accommodate spending on common priorities of the EU while maintaining sound and sustainable public finances in Member States.
It explicitly indicates that social and economic resilience, including the European Pillar of Social Rights, is a common priority in the EU.
As a result, increase in social and public services spending may be put forward in Member States’ medium-term fiscal-structural plans within a package of investments and reforms that underpin a more gradual fiscal adjustment, up to seven years instead of four years, thereby creating substantial additional fiscal space for such expenditures.
At the same time, the geopolitical situation has significantly worsened in recent months. This requires a fast and strong increase in spending on defence in the EU.
The activation of the National Escape Clause, in line with the conditions of Regulation 2024/1263, would allow Member States to transition to a higher level of defence expenditure without reducing the fiscal space for other expenditures in the coming years.
- [1] https://economy-finance.ec.europa.eu/economic-and-fiscal-governance/stability-and-growth-pact_en