Connecting Europe Express reaches final destination after 20,000km journey

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EU Reporter spoke to Margarida Marques MEP (S&D, PT) the European Parliament’s  rapporteur on the Review of the European Economic Governance Framework. Marques was one of the speakers at a series of debates on ‘Fiscal Matters‘, which brings together social, environmental, civil society, experts and politicians to share their views on what changes were needed to the current economic framework. EU Reporter: You are the rapporteur for the Parliament’s own-initiative report on the review of the economic governance launched in early 2020 and then stalled because of the COVID crisis.

What have we learned about economic governance from the pandemic?

MM: I think that the main element, to answer your question, is that the European Commission decided to activate the general escape clause during the pandemic, because it was clear that member states couldn’t survive with the current rules. But as you point out, the Commission had already started the debate in February 2020. It was clear, even before the pandemic, that the rules were not responding to economic and social demands, and they are also very, very complex.

It’s difficult for citizens, even politicians, to understand the rules. It’s not just because of the pandemic, but it has put the rules on the table. ER: Now that we are hopefully emerging from the pandemic, would you like to see the general escape clause extended?

And if so, for how long? And maybe if you could say something about the other instruments that have been introduced, including joint bond issuance, that’s meant to be a temporary contribution. Would you like to see that being used in the future?

MM: Yes, the general escape clause will be activated until the end of 2022, but it’s clear that it’s impossible to return to the rules exactly as they exist today. First of all, the first problem is that now we have new instruments and the European Union decided to create innovative instruments like SURE, that is supporting jobs in member states, and the Next Generation EU to support European Economic Recovery. 

Member states have to spend these funds by the end of 2026. If you reinstate the rules on 1 January 2023 it will be impossible for some states to spend the funds.

So the best scenario is that the general escape clause will be deactivated when new rules are introduced, that there is a transition phase. I am very pragmatic, we need to have a transition phase before the new rules, I know very well how complex and how much time decisions take to be made.  ER: You have a Social Democrat led government in Portugal.Are you pleased that Germany is now likely to have an SPD-led coalition? 

MM: The parliament could adopt my own-initiative report, at plenary. It enjoys broad support. We have the right wing parties voting in favour, the Socialist group are in favour.

We started with different positions, but we found common positions. I’m very happy because it was adopted with a large majority and it’s an ambitious report. This is important because this is the position of the European Parliament.

When the European Commission reopens the public debate on the revision of the fiscal rules, it will be supported by the European Parliament.  I’m very conscientious that it’s not easy to find consensus in the Council of Ministers. The position of Scholz in the campaign was that there was no need to change the rules, we can use all the existing flexibility.

From my point of view this is not enough because at the end of the day, we need rules that reduce complexity,  the current rules are not transparent and they are not democratic enough.  Flexibility is very important. For example, it was very important for the situation in Portugal in 2015-2016, the socialist government could achieve their goals on social rights, on pensions and on salaries, because we used all the flexibility as the European Commission was open to use this flexibility.

However, it means if the Commission had not been open to this flexibility, interest rates would have increased.  We need to have rules that are linked to what we want to do in future for investment in the digital and environmental transition. We need to be coherent with European political priorities.

Rules are needed. So this is my starting point. I’m not saying that each member state can do exactly what they want.

No, we need rules because when we need sustainability, we need stability – of course.

We have a common currency, so we need rules.