The European Commission recently presented the first European Semester Autumn Package under the new EU economic governance framework, setting out the path for sound public finances and sustainable growth.
This reform, in force since April 2024 and described as the most significant since the financial crisis, redefines the economic rules in the European Union. It aims to be simpler, more transparent and more effective, while ensuring better national ownership and enforcement. The rules take into account the need to gradually and sustainably reduce the increased level of public debt, including that resulting from the COVID-19 pandemic.
The new framework is expected to help Member States achieve macroeconomic stability, growth and fiscal sustainability, and thus hep the EU to maintain its economic strength in today's challenging global environment. It also encourages reforms and investments that will lay the foundations for long-term economic stability and sustainable growth.
Assessment of Luxembourg's medium-term plan
As reported by the Representation of the European Commission in Luxembourg, medium-term plans are the cornerstone of the new economic governance framework. Integrating fiscal policy, reform and investment objectives into a single medium-term plan is said to create a coherent and simplified process.
In assessing Luxembourg's medium-term plan, the European Commission concluded that it meets the requirements of the new framework and sets a credible budgetary trajectory to put Luxembourg's debt on a sustainable downward path or to maintain it at prudent levels. The Commission recommended that the Council endorses the expenditure trajectory set out in its plan.
Assessment of Luxembourg's 2025 draft budgetary plan
The Commission also assessed the draft budgetary plans (DBPs) for 2025 submitted by seventeen euro area Member States and examined whether they represent an appropriate first step in the implementation of these Member States' medium-term plans.
Concerning the DBP submitted by the Grand Duchy, the Commission considered that Luxembourg is not fully compliant with the recommendations: while its net expenditure is expected to be well within the limits set, the emergency support measures taken in the field of energy will not be phased out, as recommended by the Council, by winter 2024-2025.
Next steps
The Council and the Eurogroup will now discuss the elements presented in the autumn budget package of the European Semester.
Once the medium-term plans have been approved by the Council, the Commission will monitor whether Member States are delivering on the commitments set out in the plans throughout the period covered by them. Member States will submit annual progress reports to facilitate this monitoring and enforcement of commitments.
In the coming weeks, the Commission will present the second part of the European Semester autumn package, including the annual sustainable growth strategy, the euro area recommendation, the alert mechanism report and the proposal for a joint employment report.
