26 April, the European Commission presented a proposal
on reforming the economic governance framework. The aim is to strengthen
sustainability of the government budget and promote sustainable and inclusive
growth through gradual fiscal retrenchment, reforms and investment. An open
question is to what extent social investments should also be taken into
account. Against this background, the Spanish and incoming Belgian Council
Presidencies have launched an Informal Working Group on Social Investment
(IWGSI) following the informal meeting of the Employment, Social Policy, Health
and Consumer Affairs Council (EPSCO) in Madrid on 14 July (see July 2023 News).
Commission proposal for economic governance
to the Commission proposal, all Member States should take into account the economic
and fiscal challenges listed in the country-specific recommendations as well as
the EU's common priorities in their medium-term fiscal and structural plans.
Reforms and public investment that promote growth in line with European
priorities should thereby lead to a stretching of the adjustment plans for
"debt adjustment plans" are intended to stretch out the period for
reducing public debt. To this end, the Member States are to lay down a plan for
reforms and investments for a period of 4 to 7 years, which will be coordinated
at the European level with the European Commission and the Council. The
implementation of the jointly agreed planning and the success of the agreed
measures should be subject to constant monitoring.
Commission proposal also explicitly mentions the European
Pillar of Social Rights . Well-functioning and inclusive social protection
systems are key components of a socially and economically resilient society.
This reference to the pillar is to be seen as positive. However, it is unclear
to what extent social investments will be taken into account in the new
economic policy framework. The Spanish-Belgian initiative proposes that social
investments also lead to an extension of debt adjustment plans on the basis of
criteria yet to be laid down.
Informal Working Group on Social Investment (IWGSI), set up by the Spanish and
upcoming Belgian EU Council Presidencies, aims to make a solid case for the
added value of social investment and reform in promoting social cohesion,
economic growth and fiscal sustainability. This is to lay the groundwork for
the discussion on the inclusion of social investment in the future economic
governance of the European Union. Based on the compiled empirical evidence, the
criteria for considering specific social investments will also be derived. In
addition, the IWGSI will discuss methods to measure the success of social
investments and evaluate them accordingly.
question of who should evaluate the success of social investments at the
European level within the framework of future economic policy management is
also open. The Economic and Financial Affairs Council (ECOFIN) or the
Employment, Social Policy, Health and Consumer Affairs Council (EPSCO). From
the perspective of the Ministers of Social Affairs and Labour, the evaluation
of social investments is a core task of EPSCO. However, questions around the
sustainability of public budgets are the responsibility of ECONFIN. Questions
that will be discussed at the first joint EPSCO-ECOFIN Council in March 2024 at