The new fiscal rules that MEPs voted in favour of yesterday at the European Parliament mean that EU Member States will need to cut their budgets by over 100 billion Euro a year from 2027 or instead raise the equivalent amount through their own means.

Cuts would prevent the majority of EU member states from meeting their targets for investment in schools, hospitals and housing, a study by the New Economics Foundation for the ETUC found. The same study shows that, with the new rules, only 3 Member States will be able to make the necessary green investments to meet the climate targets. The rules risk jeopardising a Just Transition for workers in the regions most affected by the green transition.

The lack of investment that these new fiscal rules bring, will prevent the European industrial policy needed to create quality jobs and drag member states further towards another unnecessary recession whilst impeding the EU from meeting its social and climate targets.

What the EU needs are economic rules consistent with its social and climate policies, not a return to austerity that will impact the lives and jobs of thousands of workers across Europe. The European Union needs a permanent investment mechanism at EU level with the capacity to meet its social and green objectives, and to fund a real European industrial policy.

“In its 2023 Strategic Foresight Report, the European Commission highlights that additional investments of about €620 billion annually will be needed to meet the objectives of the Green Deal and of our REPowerEU plan, with an additional €92 billion needed to address the objectives of the Net-Zero Industry Act over the 2023-2030 period. The new rules makes these investments impossible for most Member States.

While China and the US invests in critical industries, European austerity measures risks further undermining Europe’s ability to compete globally. This is particularly concerning for Europe’s competitiveness, as no work has even started on a permanent EU investment instrument. Europe needs an industrial strategy that delivers the European Green Deal, ensures quality jobs, and a just transition for workers. The new economic governance rules will undermine all of these.

Europe needs to urgently correct this mistake by putting in place enough own resources and an ambitious tax policy in order to mitigate the negative effects of the cuts that come with the new rules. We need policymakers to urgently advance on a European Sovereignty Fund to support Member States in making the necessary green investments. We need to increase EU own resources and promote a fair and ambitious tax policy in Europe including a wealth tax to finance social investments and the climate transition like proposed in the European Citizens’ Initiative which we encourage all to sign here.” says Judith Kirton-Darling, industriAll Europe general secretary.