Policy lab on public finances fit for the future
The challenge: Making public finances fit for the future
Fiscal policy instruments are essential for the achievement of environmental targets and to ensure that no one is left behind in the green transition. In the light of the objectives of the Green Deal, it is of fundamental importance to align the quantity and quality of public finances with social and environmental goals. Making public finances fit for the future will require changing the narratives and orientations underpinning fiscal policy that are still primarily focused on increasing economic activity, "competitiveness" and growth.
The European Commission has calculated that annual investments will have to increase by around €520 billion per year until 2030 to achieve the goals of the European Green Deal. Additional public funding is needed to unlock this level of investment and mobilise spin-off private capital.
However, even with vast public funding, the green and just transition can only be successful if the existing and additional public funding is used in the right way. To date, massive capital flows continue, even now, into non-sustainable sectors of our economies. The revenue gains from the removal of fossil-fuel subsidies, which amount to roughly €56 billion annually for the EU, could be repurposed to facilitate the green transition. Strategic foresight is needed for better consideration of long-term risks, such as climate risks or demographic risks, in budgetary planning and debt sustainability analysis.
Innovative co-creative space for political innovation
The first half of the policy lab will discuss concrete elements of the current reform plans of the Stability and Growth Pact and its potential to strengthen the resilience of public finances.
The second part of the policy lab will open a space for discussion about tools beyond the economic governance reform, especially with respect to assessing and ensuring the quality of public finances at national and EU levels. This includes a reflection of instruments to increase the fiscal leeway for meeting green and social targets as well as tools to ensure and assess the quality of public spending at national level.
European Economic and Social Committee, Brussels
• Contribute your expertise to the discussion on how the SGP reform can help to make public finances fit for the future
• Connect with leading opinion experts and policy-makers
• Join a thinking space to find out what is needed to improve the quality of public finances