The implementation of national medium-term fiscal structural plans: Recent fiscal developments and draft budgetary plans for 2026

On 3 March 2026, the EFB released a report reviewing the implementation of the first vintage of medium-term fiscal structural plans (MTFSP), the national commitment devices under the new EU fiscal rules. While the EU economy shows resilience, the Board considers that high debt levels and rising spending pressures necessitate rigorous enforcement of the new rules to safeguard the sustainability of national public finances. 

The EFB comments on the European Commission’s "mechanical" approach when assessing compliance, noting that formal labels are difficult to interpret without additional qualifications. Moreover, the report points to preliminary signs of pro-cyclical fiscal policies, where some Member States seem to be adjusting their net expenditure paths upwards or downwards on the back of higher or lower-than-expected economic growth, respectively. 

Pieter Hasekamp, Chair of the European Fiscal Board, stated:

"The consistent and credible application of the EU’s fiscal framework is paramount to safeguarding long-term sustainability. As we navigate the complex trade-offs between debt reduction and urgent priorities like defence, the EFB provides the essential transparency needed to ensure these rules remain a credible anchor for the euro area."

The EFB highlights the extensive interpretation of national escape clauses for defence spending, warning that such flexibility should not lead to untargeted fiscal loosening. The recommendation is that countries start devising a strategy to accommodate permanently higher defence spending before the end of the activation period. To maintain the integrity of the new regime, the EFB also calls for closer and early monitoring of the reform and investment commitments made by Member States in exchange for extended adjustment periods.