European Commission - Statement Statement by Commissioner Dombrovskis before the European Parliament's joint ECON-EMPL committee on the European Semester Spring Package Brussels, 23 June 2026 Honourable Co-Chairs, Honourable Members, It is a pleasure to be back here for this economic dialogue. The 2026 Spring Package comes at a time of profound geopolitical uncertainty and growing global competition. While the Europe...
European Commission - Statement Statement by Commissioner Dombrovskis before the European Parliament's joint ECON-EMPL committee on the European Semester Spring Package Brussels, 23 June 2026 Honourable Co-Chairs, Honourable Members, It is a pleasure to be back here for this economic dialogue. The 2026 Spring Package comes at a time of profound geopolitical uncertainty and growing global competition. While the European economy has shown resilience in the face of successive crises, we need to strengthen Europe's competitiveness, secure long-term prosperity, and preserve strategic autonomy. For that, Europe's growth rate needs to structurally increase. This year's country-specific recommendations to Member States focus on actions in four priority areas: Ensuring macroeconomic stability and fiscal sustainability, while addressing key priorities such as defence. I come back to the fiscal part in a few minutes. Promoting innovation and improving the business environment. This includes simplification, tackling single market bottlenecks, improving access to finance, and reducing excessive dependencies in critical raw materials. Ensuring energy security and affordability. This means investments in grids and renewables as well as the decarbonization of our economies. Promoting employment, education and skills, and social fairness. Roxana will speak more on this. The recommendations also aim to maximise the impact of EU funds, address the challenges of affordability of housing, and, where relevant, focus on regional disparities. And finally, the recommendations acknowledge the unique challenges faced by our Eastern border regions. The Member States concerned have received recommendations focused on addressing their socio- economic, preparedness and security challenges. Moving to fiscal. Sound public finances remain vital for preserving macroeconomic stability in an increasingly unpredictable and challenging world. We must safeguard fiscal sustainability in a context of persistently high debt in a number of Member States, and new and urgent demands on our public finances. The spring package calls on Member States to continue reinforcing defence spending, for which they can benefit from temporary fiscal flexibility under the national escape clause. 18 Member States have so far made use of this possibility. At the same time, it is important to improve the efficiency of defence spending and adapt the budgets to sustain structurally higher defence spending after 2028. The package also takes into account the impact of the energy shock resulting from the conflict in the Middle East. It is clear: measures to support households and businesses must be temporary, targeted and should not increase the aggregate demand for fossil fuels. Unfortunately, most measures currently do not align with these criteria. They are often set to expire soon and should not be prolonged. Moreover, measures to strengthen the structural resilience of the European energy system and accelerate the transition away from fossil fuels may benefit from the existing flexibility within the fiscal framework. Upon request by a Member State, the scope of the current National Escape Clause for defence can be broadened. So, within the existing cap of 1.5% of GDP, a dedicated annual cap of 0.3% of GDP could apply specifically for energy security measures undertaken since February this year. This would be available for the period 2026 to 2028, with a cumulative cap of 0.6% of GDP. For those few Member States that have already used full flexibility under the national escape clause to increase defence spending, this would allow them to move beyond 1.5% of GDP subject to an additional sustainability assessment. Looking ahead, our fiscal recommendations call on Member States to remain in line with fiscal requirements and to enhance the quality and efficiency of public spending, including through fiscal- structural reforms. We also assessed Member States' compliance with the EU fiscal rules. For Member States under an excessive deficit procedure, Malta's deficit fell durably below 3% of GDP last year. This led us to propose abrogating Malta's EDP. For the others, the Commission considers that the procedures for Belgium, France, Italy, Hungary, Austria, Poland, Romania, Slovakia and Finland, can be held in abeyance. That said, if we look at Hungary this year, net expenditure growth is projected to be clearly above the recommended corrective path. Therefore, we will reassess the situation in autumn and we may then have to step up the procedure. Turning to the Member States not in EDP. Ten Member States – Czechia, Denmark, Germany, Estonia, Greece, Latvia, Cyprus, Portugal, Ireland, Sweden – are compliant. Spain is compliant in 2025, while being at risk of non-compliance in 2026. This indicates a need of prudence in the fiscal implementation for the rest of the year. Further, six Member States – Slovenia, Lithuania, Luxembourg, Netherlands, Bulgaria and Croatia – deviate or materially deviate from their net expenditure growth in 2025, or are projected to do so in 2026. These Member States are recommended to take action to control net expenditure. The Commission also prepared a report under Article 126(3) of the Treaty, covering five Member States – Bulgaria, Germany, Estonia, Latvia and Slovenia. The Commission will shortly propose to open an excessive deficit procedure for Bulgaria. For the other four countries, the report concluded that it is not warranted to open a procedure at this stage. Finally, the Commission has assessed the existence of imbalances in the seven Member States for which it prepared in-depth reviews this year. Greece, the Netherlands and Sweden have been assessed as no longer experiencing imbalances. While Italy, Hungary and Slovakia are still experiencing imbalances, and Romania is still experiencing excessive imbalances. To conclude, advancing our competitiveness agenda and maintaining fiscal sustainability go hand in hand and are essential to securing Europe's long-term prosperity, resilience, and sovereignty. The work ahead, as set out in our country-specific recommendation, will require sustained effort. Let me stress that our dialogue with this House remains central to this process. We count on your continued support in delivering the ambitious reforms and investments needed to build a more competitive Europe. STATEMENT/26/1407
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