Since the creation of the Economic and Monetary Union (EMU) with the Maastricht Treaty in 1992, Member States have been required to regard their economic policies as a matter of common concern, and to coordinate them at EU level, while aiming to avoid deficits above 3% of GDP and to keep public debt below 60% of GDP. In the following years, the economic governance framework has evolved significantly, with important milestones including first the Stability and Growth Pact (SGP) in 1997, and later – in the wake of the crisis – the so-called "six-pack" and "two-pack" packages of legislative measures (in 2011 and 2013 respectively). The instigation by these packages of the European Semester of economic policy coordination also represented a crucial development.
While these rules and coordination mechanisms have had some success in correcting imbalances and reducing public debt, the framework has become highly complex. Furthermore its critics argue that it has been far too pro-cyclical, leading for instance to contractions of public investment during downturns where fiscal stimulus would have been beneficial. The democratic accountability and transparency of the processes at play are also in question.
The Communication on the Review of the economic governance framework, published on 5 February 2020, contains an assessment of how the rules (Stability and Growth Pact, 2-pack and 6-pack, mostly) have worked in the past years, and lists a number of questions aiming to kick-start a debate (including a public consultation) on the framework's possible evolution.
This opinion will allow the COR to play an active role in this review of the economic governance framework, which is essential. With European cities and regions responsible for a third of public expenditure and more than half of public investment, the economic governance framework and its rules have a direct impact on their ability to fund their policy objectives. Public investment by local and regional authorities, for instance, is still 25% lower than it was before the crisis in the EU as a whole, and much lower still in some Member States.