It is a pleasure to be here for our regular exchange on the European Semester.
The European Semester Autumn Package comes at a key moment as Europe navigates a period of heightened global uncertainty and security challenges.
This is why enhancing Europe's competitiveness, productivity and innovation remain our highest priority.
It is the key to unlocking Europe's full growth potential, securing our long-term prosperity and bracing ourselves for new geopolitical realities.
The Competitiveness Compass provides an overall roadmap to guide our work.
And the European Semester is the central mechanism for coordinating the implementation of policies at national level, in line with the Compass.
Allow me to now present the key elements making up the European Semester Autumn Package.
Beginning with the euro area recommendation.
It calls on Member States to take action across several directions, including:
On fiscal policy: ensuring compliance with the fiscal rules to safeguard fiscal sustainability
On security: making use of the flexibility within the fiscal rules for defence spending, and addressing defence industry bottlenecks, also to support an effective use of public funds.
On investment: reducing obstacles by simplifying the business environment and completing the single market, while prioritising investment in research and innovation and other strategic priorities.
For the labour market: strengthening education and training policies as well as raising labour market participation and mobility.
On the financial sector: advancing on the savings and investment union, completing work on the digital euro, strengthening the euro's international role, and closely monitoring financial risks.
At the same time, it emphasises the need for Member States to continue implementing recovery and resilience plans before the August 2026 deadline.
Taken together, the implementation of these and other growth-enhancing measures at national level will complement and reenforce our efforts at EU-level to boost competitiveness.
Turning now to the fiscal elements of the Autumn Package.
We have made a good start with the implementation of the new fiscal framework.
We now need to keep up this focus and enhance the efficiency and quality of public spending and revenues.
This is especially important given the immense demands on public finances in a context of fiscal sustainability risks in many Member Statas.
After declining substantially in previous years, the aggregate euro area debt-to-GDP ratio started to edge up again this year.
The fiscal stance in the euro area, which reflects the discretionary impulse from budgetary policy, is expected to remain broadly neutral this year and next, with fiscal expansion in Germany balancing continued consolidation in higher-debt countries.
This neutral stance is appropriate since it will support inflation stabilization and growth, amid global uncertainties.
On fiscal assessments.
All Member States have now submitted their medium-term plans, and the Council has adopted recommendations setting net expenditure paths for each of them.
The Autumn Package presents our assessment of compliance with these recommendations, taking into account the flexibility provided by the national escape clause.
In particular, the Commission is presenting its Opinion on the draft budgetary plans (DBPs) for 2026 of the 17 euro area Member States that have presented them in October.
This excludes Belgium and Spain, which will present a DBP once a draft budget has been tabled in their respective parliaments.
For Belgium, we expect a DBP shortly.
For Austria, our assessment for 2026 was already included in our opinion in June.
Overall, the first full assessment under the new rules is encouraging.
But challenges are looming over the medium term, in particular light of the financing needs of permanently higher defence expenditure.
We find the draft budgetary plans of 14 member States to be compliant with the recommended net expenditure growth.
These are: Luxembourg, Finland, Germany, Estonia, Greece, Latvia, Italy, Slovakia, France, Cyprus, Ireland, Portugal, Austria, and Belgium.
Four euro area Member States are at risk of non-compliance.
Their net expenditure is projected to grow faster than allowed.
These are: Croatia, Lithuania, Slovenia and Spain.
And – as mentioned – Spain did not yet submit a DBP.
The Netherlands – which has an overall solid fiscal position with debt below 60% and a deficit below 3% of GDP – is at risk of material non-compliance.
Net expenditure is forecast to increase substantially faster than recommended.
This is also the case for Malta, which is currently in the excessive deficit procedure (EDP).
Turning now to the non-euro area Member States.
Five – Denmark, Czechia, Poland, Romania and Sweden – are projected to be compliant.
Let me add a word on Romania.
Thanks to the significant fiscal measures adopted over the summer, the situation has clearly improved.
As a result, the Commission at this stage does not propose a suspension of EU funds under the macroeconomic conditionality procedure.
At the same time, the deficit is still very high and risks remain.
It is crucial now for Romania to stay the course and implement the planned fiscal consolidation measures rigorously.
Hungary, in turn, is at risk of non-compliance.
And finally Bulgaria, which will soon become a member of the euro area, is also at risk of non-compliance.
We invite the Member States where there are risks to take the necessary measures to ensure compliance.
This is particularly important for Member States under an excessive deficit procedure.
For these Member States, a lack of effective action, if confirmed in spring next year based on outturn data, may entail procedural and financial consequences.
The Commission also presented a report under Article 126(3) to assess compliance with the Treaty's deficit criterion, covering Germany and Finland.
Finland exceeded the 3% of GDP reference value in 2024 and plans to exceed it in this year.
Germany also plans to exceed the reference value this year.
In the case of Germany, the small excess over 3% is fully explained by the additional defence spending.
As a result, there was no case to open an excessive deficit procedure.
For Finland, we acknowledged the exceptional circumstances that had a major impact on Finland's public finances – namely the unfavourable economic situation as well as the urgent need to increase defence spending.
However, the deficit in excess of 3% of GDP is not fully explained by the increase in defence spending alone.
The report therefore concluded that the opening of a deficit-based EDP is warranted for Finland.
The Economic and Financial Committee confirmed this conclusion at the beginning of this month.
On that basis, the Commission has last week proposed to open the excessive deficit procedure for Finland and recommended to the Council to issue a recommendation to Finland to put an end to the excessive deficit situation.
This includes a corrective path to bring the deficit back below 3% of GDP.
This brings me finally to the Alert Mechanism Report.
The report concludes that we will prepare in-depth reviews for the seven Member States that were already identified as experiencing imbalances or excessive imbalances in previous cycles.
These are: Greece, Italy, Hungary, Slovakia, Romania, the Netherlands and Sweden.
No new Member State has been identified to undergo an in-depth review.
Yet, we will remain vigilant in monitoring risks, especially in areas like house prices and cost competitiveness.
Let me to conclude by stressing that dialogue with this House remains an essential part of the European Semester process.
I will stop here and look forward to your questions and comments.
