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New EU framework for economic policy: reforms for the future and stability!
Political scientists from the University of Magdeburg use PROSPER to research EU budget policy and develop recommendations for reform.
New EU framework for economic policy: reforms for the future and stability!
On April 15, 2025, the Otto von Guericke University Magdeburg will intensify its role in European research on the redesign of public finances. Political scientists at the university are members of the PROSPER research network, which studies EU budget and economic policy. This network consists of twelve institutions from different European countries and has set itself the goal of developing concrete recommendations for action through scientific exchange and workshops.
Led by Prof. Eva Heidbreder, the research team focuses on the policy design and governance of reforms revolving around the EU fiscal rules and the EU budget. Special topics include investments in defense, security, innovation and competitiveness as well as stability in the euro area. Negotiations are currently underway on the European Union's multiannual financial framework, which also includes important questions about budget size, expenditure and the origin of funds within the EU.
Innovations in fiscal policy control
Loud germany.representation.ec.europa.eu The European Parliament and the Council of the EU recently reached a political agreement on a new economic governance framework. Valdis Dombrovskis, executive vice-president of the European Commission, called the agreement a significant step forward. The aim of the new framework is to strengthen Member States' debt sustainability and promote a sustainable and inclusive growth path.
The new framework is described as simpler, more transparent and more effective. A central component is the introduction of new medium-term structural fiscal policy plans, which the member states must develop from 2024. These plans include budgetary targets, reforms and investments, which will be assessed by the Commission and approved by the Council. In addition, risk-based monitoring will be established based on the budgetary situation of each Member State.
Challenges and opportunities
The challenges facing the EU are diverse. The increased public debt levels, particularly as a result of the COVID-19 pandemic, require an adjustment of fiscal policy rules. The Commission also sees the need to increase the budget and pay off debt incurred during the pandemic. A meaningful framework for managing these financial obligations is crucial to ensure economic stability within the Union. europarl.europa.eu highlights that the new framework will come into force from 30 April 2024 and represents a fundamental overhaul of the existing economic governance.
In addition, the Commission calls for annual reporting on Member States' progress and encourages simplified and automated handling of excessive deficit procedures. Member states that do not follow the new rules could be taken to the European Court of Justice, underlining the importance of compliance with fiscal rules.
The comprehensive approach to reforming EU fiscal policy shows how seriously the current challenges are being addressed. These reforms, similar to the changes between 2011 and 2013 in response to the sovereign debt crisis, could lead to a more stable economic foundation in the EU.
The first event of the PROSPER research project, a public panel discussion, will take place on June 14, 2025 as part of the “Long Night of Science”. The three-year project is funded with a sum of 1 million euros and will provide an analytical support process to the negotiations on these important economic issues.