The Independent Authority for Fiscal Responsibility (AIReF) held the second edition of the workshop with the country’s main research services today, focusing on the reform of fiscal governance in the European Union. The President of AIReF, Cristina Herrero, opened the session by reviewing the main features of the new framework, which entails a far-reaching reform of the economic and fiscal governance scheme that has prevailed until now.
Under the new framework, the main aim is now to reduce debt in a sustained and viable manner. Countries are to play a much more active role in defining fiscal policy and make a greater commitment to debt reduction compatible with growth by incentivising investment and reforms. A counter-cyclical fiscal policy is also sought and fiscal commitments are formulated and monitored differently. The new framework also provides for the strengthening of Independent Fiscal Institutions (IFIs) such as AIReF, which take on the new role of analysing the consistency, coherence and effectiveness of the national framework.
According to Cristina Herrero, the reform entails fundamental improvements, although its implementation in a country with a high degree of decentralisation, such as Spain, poses numerous challenges. One such challenge is achieving consensus on the structural-fiscal plan so that the implementation of the commitments is feasible and realistic, which requires maximum transparency and the involvement of all General Government sub-sectors. In the longer term, the reform requires a review of the national framework with a comprehensive vision to align it with the European framework.
While discussing the challenges, Cristina Herrero also highlighted the opportunities that the fiscal consolidation scenario presents. She emphasised the need to balance fiscal consolidation with high spending pressures, geopolitical risks, and a more complex macroeconomic scenario. In the coming years, countries will need to make significant investments to address the ecological and digital transition, ensure energy security, strengthen defence capabilities, and enhance economic and social resilience.
In the first block of the workshop, the former Director of Macroeconomic Policies at the European Commission from 2011 to 2023 and current non-resident fellow at Bruegel, Lucio Pench, and the Deputy Director of Public Indebtedness at AIREF, Lucía Rodríguez, explained the fundamental aspects of the reform. The second block, meanwhile, focused on the present and future investment needs of EU countries and involved the participation of the Lead Economist of Climate Change at BBVA Research, Julián Cubero, and the Director of the International and Euro Area Economics Department at the Bank of Spain, Javier Pérez.