Category: Press Releases

The press release issued by the European Commission on 9 November 2022.

The European Commission has today adopted a Communication setting out orientations for a reformed EU economic governance framework. Taking into account the key concerns over the current framework, these aim to strengthen debt sustainability and enhance sustainable and inclusive growth through investment and reforms.

The orientations seek to ensure that the framework is simpler, more transparent and effective, with greater national ownership and better enforcement, while allowing for reform and investment and reducing high public debt ratios in a realistic, gradual and sustained manner. In this way, the reformed framework should help build the green, digital and resilient economy of the future, while ensuring the sustainability of public finances in all Member States, in line with President von der Leyen‘s 2022 State of the Union address. Today’s Communication follows extensive outreach to stakeholders and Member States.

National plans to ensure debt sustainability and enhance sustainable growth, anchored in a common EU framework

It is proposed to move to a transparent risk-based EU surveillance framework that differentiates between countries by taking into account their public debt challenges. National medium-term fiscal-structural plans are the cornerstone of the Commission’s proposed framework. They would integrate fiscal, reform and investment objectives, including those to address macroeconomic imbalances where necessary, into a single holistic medium-term plan, thus creating a coherent and streamlined process. Member States would have greater leeway in setting their fiscal adjustment path, strengthening the national ownership of their fiscal trajectories.

A single operational indicator – net primary expenditure, i.e. the expenditure which is in a government’s control – would serve as a basis for setting the fiscal adjustment path and carrying out annual fiscal surveillance, thereby significantly simplifying the framework.

How it would work:

• As part of the common EU framework, the Commission would present a reference fiscal adjustment path, covering a period of four years, based on its debt sustainability analysis methodology. This reference adjustment path should ensure that debt of Member States with substantial or medium debt challenges would be put on a plausible downward path, and that the deficit would remain credibly below the 3% of GDP reference value set out in the Treaty.
• Member States would then submit plans setting out their medium-term fiscal path, and priority reform and public investment commitments. Member States could propose a longer adjustment period, extending the fiscal adjustment path by up to three years when the path is underpinned by a set of reform and investment commitments that support debt sustainability and respond to common EU priorities and targets.
• As a third step, the Commission would assess the plans, providing a positive assessment if debt is placed on a downward path or stays at prudent levels, and the budget deficit remains credibly below the 3% of GDP reference value over the medium term. The Council would endorse the plans following a positive assessment from the Commission.
• Finally, the Commission would continuously monitor the implementation of the plans. Member States would submit annual progress reports on the implementation of the plans to facilitate effective monitoring and ensure transparency.

More scope would be given to Member States for the design of their fiscal trajectories. At the same time, we are also putting in place more stringent EU enforcement tools to ensure delivery. The deficit-based excessive deficit procedure (EDP) would be maintained, while the debt-based EDP would be reinforced. It would be activated when a Member State with debt above 60% of GDP deviates from the agreed expenditure path.

Enforcement mechanisms would be reinforced: the use of financial sanctions would be made more effective by lowering their amounts. There would also be stronger reputational sanctions. The macroeconomic conditionality for structural funds and for the Recovery and Resilience Facility would be applied in a similar spirit, i.e. EU financing could also be suspended when Member States have not taken effective action to correct their excessive deficit.

In addition, a new tool would ensure the implementation of reform and investment commitments underpinning a longer adjustment path. A failure to implement reform and investment commitments could result in a more restrictive adjustment path and, for euro area Member States, the imposition of financial sanctions.

More effectively preventing and correcting harmful imbalances

The Macroeconomic Imbalance Procedure (MIP) aims to identify potential macroeconomic risks early on, prevent the emergence of harmful macroeconomic imbalances and correct the imbalances that already exist. The reform proposals for the MIP centre on an enhanced dialogue between the Commission and Member States to create a better common understanding of the challenges identified under the MIP and the policies needed to address them. This would, in turn, lead to a commitment from Member States to include the reforms and investments needed to prevent or correct imbalances in their national medium-term fiscal-structural plan.

The preventive role of the MIP would be strengthened in a macroeconomic environment characterised by new and evolving risks. The assessment of whether imbalances exist would be made more forward-looking with a view to detecting and addressing emerging imbalances early on. More weight would be placed on trend developments and on whether policies have been implemented to address imbalances, when assessing whether imbalances have been corrected.

A more focused and streamlined post-programme surveillance framework

Post-programme surveillance assesses the repayment capacity of Member States that have benefited from financial assistance programmes. As part of the new framework, and while keeping the legislative text unchanged, the Commission proposes to apply it differently by setting clearer objectives, with the intensity of the framework linked to these objectives. In particular, post-programme surveillance would focus on assessing repayment capacity, monitoring the implementation of unfinished reforms, and assessing whether corrective measures are needed in the context of concerns for repayment capacity or continued market access.

The intensity of post-programme surveillance would evolve over time, along with the evolving risk assessment.

Next steps

Swift agreement on revising the EU fiscal rules and other elements of the economic governance framework is a pressing priority at the current critical juncture for the EU economy. Member States and the Commission should reach a consensus on the reform of the economic governance framework ahead of Member States’ budgetary processes for 2024.

The Commission will consider tabling legislative proposals on the basis of today’s Communication and the ensuing discussions. It will again provide guidance for fiscal policy for the period ahead in the first quarter of 2023. This guidance will facilitate the coordination of fiscal policies and the preparation of Member States’ stability and convergence programmes for 2024 and beyond.

Background

Since the Treaty of Maastricht of 1992, the EU’s economic governance framework has helped to create conditions for economic stability, sustainable economic growth and higher employment. This framework consists of the EU fiscal policy framework (the Stability and Growth Pact, the European Semester, and requirements for national fiscal frameworks), the Macroeconomic Imbalances Procedure, and the framework for macroeconomic financial assistance programmes.

However, while the framework has evolved over time to address certain weaknesses, it has also grown increasingly complex and not all instruments and procedures have stood the test of time.

The reform proposals set out in the Communication follow a review of the effectiveness of the economic surveillance framework first launched in February 2020 (and relaunched in October 2021). The review was carried out in line with the so-called six-pack and two-pack legislative reforms, which require the Commission to review and report on the application of the legislation every five years. Today’s orientations take into account the extensive public debate and consultation process where a wide range of stakeholders expressed their views on the key objectives of the framework, its functioning, and new challenges to be addressed.

The lessons learned from the policy responses to recent economic shocks, including the interaction between reforms and investment under the Recovery and Resilience Facility, have informed the Commission’s proposal for a reformed framework. The reform proposals are also shaped by the higher and more diverse public debt levels and the need to facilitate investments for common EU priorities, notably to ensure the green and digital transitions, and energy security in the years to come.

The press release issued by the European Commission on 9 November 2022.

Following the European Council meeting of 20-21 October 2022, the Commission has today proposed an unprecedented support package for Ukraine of up to €18 billion for 2023. This will come in the form of highly concessional loans, disbursed in regular instalments as of 2023.

This stable, regular and predictable financial assistance – averaging €1.5 billion per month – will help cover a significant part of Ukraine’s short-term funding needs for 2023, which the Ukrainian authorities and the International Monetary Fund estimate at €3 to €4 billion per month. The support put forward by the EU would need to be matched by similar efforts by other major donors in order to cover all of Ukraine’s funding needs for 2023.

Thanks to this package, Ukraine will be able to keep on paying wages and pensions and maintain essential public services running, such as hospitals, schools, and housing for relocated people. It will also allow Ukraine to ensure macroeconomic stability, and restore critical infrastructure destroyed by Russia in its war of aggression, such as energy infrastructure, water systems, transport networks, roads and bridges.

Support under the instrument will be accompanied by reforms, to further enhance the rule of law, good governance, anti-fraud and anti-corruption measures in Ukraine. Therefore, while taking into account the evolution on the ground, financial support will be framed by policy conditions, geared towards strengthening Ukraine’s institutions and preparing the ground for a successful reconstruction effort, as well as supporting Ukraine on its European path.

How will this package work?

Building on previous Macro-Financial Assistance packages, this Macro-Financial Assistance+ (MFA+) instrument offers high flexibility and very favourable terms for Ukraine, catering to the country’s current situation and ensuring swift action to support the Ukrainian people.

The funds will be provided through highly concessional loans, to be repaid in the course of maximum 35 years, starting in 2033. In a further expression of solidarity, the EU also proposes to cover Ukraine’s interest rate costs, through additional targeted payments by Member States into the EU budget. EU Member States and third countries will also be able to add more funds to the instrument, to be used as grants, should they wish to do so. The funds will then be channelled through the EU budget, allowing Ukraine to receive the support in a coordinated manner.

The MFA+ instrument will be accompanied by reforms to help Ukraine advance on its path to becoming a member of the EU. This means that the Ukrainian government will have to complement the financial support with sectoral and institutional reforms, including anti-corruption and judicial reforms, respect of the rule of law, good governance, and modernisation of the national and local institutions. We will check that these reforms have been effectively put in place when paying out the instalments.

How will the package be financed?

To secure the funds for the loans, the Commission proposes to borrow on capital markets using the diversified funding strategy. This would enable the Commission to use the full portfolio of funding instruments to secure market funding on the most advantageous terms, when these are needed.

To guarantee this borrowing for Ukraine, the Commission proposes to use the headroom of the 2021-2027 EU budget in a targeted manner for Ukraine, limited in time. The headroom is the difference between the own resources ceiling (i.e. the maximum amount of resources that the Commission can ask Member States to contribute in a given year) and the funds that it actually needs to cover the expenses foreseen by the budget. The headroom, which is already used to guarantee the borrowing for financial assistance programmes to Member States, will guarantee bond investors that the amounts lent to the EU to finance Ukrainian loans borrowing will be repaid under all circumstances.

Next steps

To ensure a smooth delivery of the package, the Commission is putting forward three legislative proposals. These will need approval by the European Parliament and EU Member States in the Council before entering into force.

As always, the Commission will be working hand in hand with all EU institutions concerned for a swift adoption.

Background

Russia’s unprovoked and unjustified invasion of Ukraine has inflicted horrific human pain and mass-scale destruction of towns and communities. The European Union and its Member States have shown unwavering solidarity with people fleeing the war. The Union has immediately mobilised support to the Ukrainian government to keep its essential functions going, on top of the emergency and humanitarian assistance, and military aid provided to Ukraine.

Since the start of the war, Team Europe has mobilised €19.7 billion to support Ukraine, a large part of which comes in the form of macro-financial assistance (MFA). We have already disbursed €4.2 billion in MFA and will disburse further €2.5 billion by the end of the month as second disbursement of EUR 5 billion emergency MFA. Another €620 million in grants as budget support has also been disbursed to help Ukraine cover urgent needs on the ground.

In addition, Member States have shown unprecedented solidarity by welcoming millions of people fleeing the war in Ukraine. To support these efforts, the EU has activated the Temporary Protection Directive, granting access to jobs, housing, education and healthcare across the EU to over 4 million people fleeing the war.

The Commission is also coordinating its largest ever operation under the EU Civil Protection Mechanism for a wide array of support measures for Ukrainian citizens, including in the health, energy, food and agriculture sectors, and providing shelters, machinery as well as vital medical and energy equipment and evacuations.

Furthermore, the Commission, together with the Member States and the Energy Community, has been providing support for the Ukrainian energy system since this spring, and stepped up its efforts following the targeted shelling of vital energy infrastructure. The EU’s Civil Protection Mechanism has facilitated the shipment of generators, transformers and cables, among others. Under the Ukraine Energy Support Fund established by the Energy Community at the request of the European Commission, €25.5 million have been made available to cover the immediate needs in the energy sector. The Commission also delivered more than €40 million worth Chemical, Biological, Radiological and Nuclear threat countermeasures and equipment from the EU reserves and allocated €13 million for the restoration of laboratories damaged by the Russian occupiers at Chornobyl.

To support Ukraine, the Commission has also put forward measures to facilitate trade, notably the suspension of import duties on Ukrainian exports, and to establish solidarity lanes to help Ukraine export agricultural goods.

In addition, military assistance measures amounting to €3.1 billion have been provided under the European Peace Facility. This will be used to reimburse Member States for their in-kind military support to Ukraine.

The EU’s efforts to support Ukraine come on top of the comprehensive set of actions put forward to tackle the dramatic consequences of Russia’s war of aggression. The invasion has led to the ramping up of energy prices and of the overall cost of living for citizens in the EU. In this context, both the EU and Member States have been taking concrete measures to support businesses and households, especially vulnerable ones, in their ability to pay their energy bills and to ensure access to energy supplies.

The press release issued by the European Commission on 7 November 2022.

Today, the Commission adopted a proposal for a Regulation to enhance transparency in the field of short-term accommodation rentals and help public authorities ensure their balanced development as part of a sustainable tourism sector.

While short-term accommodation bookings offer benefits for hosts and tourists, they can create concerns for certain local communities struggling, for instance, with a lack of affordable housing. The new rules will improve the collection and sharing of data from hosts and online platforms. This will, in turn, inform effective and proportionate local policies to address the challenges and opportunities related to the short-term rental sector.

The new proposed rules will help to improve transparency on the identification and activity of short-term accommodation hosts, and on the rules they have to comply with, and will facilitate the registration of hosts. They will also tackle the current fragmentation in how online platforms share data and, ultimately, help prevent illegal listings. Overall, this will contribute to a more sustainable tourism ecosystem and support its digital transition.

New requirements for data sharing for short-term rentals

The new proposed framework will:

•  Harmonise registration requirements for hosts and their short-term rental properties when introduced by national authorities: registration schemes will have to be fully on-line and user-friendly.  A similar set of relevant information on the hosts and their properties, namely the “who”, “what” and “where”, should be required. When completing registration, hosts should receive a unique registration number.

•  Clarify rules to ensure registration numbers are displayed and checked: online platforms will have to facilitate hosts to display registration numbers on their platforms. They will also have to randomly check whether hosts register and display the correct numbers. Public authorities will be able to suspend registration numbers and ask platforms to delist non-compliant hosts.

•  Streamline data sharing between online platforms and public authorities: online platforms will have to share data about the number of rented nights and of guests with public authorities, once a month, in an automated way. Lighter reporting possibilities are foreseen for small and micro platforms. Public authorities will be able to receive this data through national ‘single digital entry points’. This will support well-targeted policy making.

•  Allow the reuse of data, in aggregate form: the data generated under this proposal will, in aggregate form, contribute to tourism statistics produced by Eurostat and feed into the upcoming European data space for tourism. This information will support the development of innovative, tourism-related services.

• Establish an effective framework of implementation: Member States will monitor the implementation of this transparency framework and put in place the relevant penalties for non-compliance with the obligations of this Regulation.

Next Steps

The Commission’s proposal will be discussed in view of adoption by the European Parliament and the Council.

After its adoption and entry into force, Member States will have a two-year period to establish the necessary mechanisms for data exchanges.

Background

Short-term rentals are developing fast in the EU, largely boosted by the platform economy. They represent about one quarter of all tourist accommodation in the EU and their number is increasing significantly across the EU. This trend was confirmed during the COVID crisis: the number of short-term rental bookings during the summers of 2020 and 2021 were above the equivalent 2018 levels. In addition, the number of bookings over the first half of 2022, has increased by 138% compared with the same period in 2021. Short-term rentals have become critical for the EU tourism ecosystem, including guests and hosts, and for many communities, creating both opportunities and challenges.

The proposal for a Regulation on data collection and sharing relating to short-term accommodation rental services is a key action of the tourism transition pathway, published in February 2022. The proposal was announced in the Commission’s SME Strategy of March 2020 with a view to promoting the balanced and responsible development of the collaborative economy across the Single Market, in full respect of public interests.

It will also complement existing instruments, in particular the Digital Services Act which regulates online platforms, and the rules of the Directive on administrative cooperation in the field of taxation (DAC7).

The press release issued by the European Commission on 6 November 2022.

The President of the European Commission, Ursula von der Leyen, spoke today with President of Ukraine, Volodymyr Zelenskyy. The main focus of the conversation was on ensuring financial support for Ukraine in the months ahead. President von der Leyen informed President Zelenskyy that she would this week propose a substantial financial package from the EU of up to EUR 1.5 billion a month, totalling up to EUR 18 billion, which would contribute significantly to cover Ukraine’s financing needs for 2023. Both leaders recognised the importance of ensuring predictable and regular funding of essential state functions. The support in the form of highly concessional long-term loans, with coverage of the interest costs, would also work to support Ukraine’s reforms and its path towards EU membership. The EU financial package would need to be matched by similar support from other major donors. President von der Leyen confirmed ongoing work by the EU to continue to provide immediate humanitarian support to Ukraine, particularly over the winter. President von der Leyen reiterated that the EU is in it for the long haul in its support for Ukraine.

The leaders also discussed the importance of ensuring Ukraine’s agricultural exports can reach the world. In addition to full support for the UN’s efforts to reach agreement with Russia on the Black Sea Grain Initiative, the leaders also discussed plans to expand the capacities of the EU-Ukraine Solidarity Lanes, which have so far been used to transport the great majority of Ukrainian agricultural and non-agricultural exports since the start of the Russian war.

Finally, the leaders discussed strengthening sanctions, as well as the negative role played by Iran’s support for Russia’s aggression and how to respond.