Rethinking EU economic governance to empower local investment and drive sustainable recovery
The COVID-19 crisis has reshaped Europe’s economic landscape and highlighted the essential role played by local and regional governments. From enforcing public health measures to supporting vulnerable communities, municipalities and regions have borne the brunt of the pandemic’s immediate and long-term impacts, often while facing steep declines in revenues.
As the EU reflects on the future of its economic governance, the Council of European Municipalities and Regions (CEMR) urges a rethink of the Stability and Growth Pact to better align it with today’s realities and tomorrow’s challenges.
Local governments account for nearly half of public investment in the EU, yet current fiscal rules often restrict their capacity to finance long-term projects. CEMR’s position paper identifies several ways the framework could evolve to support recovery, green and digital transitions, and social inclusion. These include:
- Stronger multi-level governance and genuine consultation with local authorities in EU economic coordination;
- Greater fiscal flexibility to support sustainable and long-term local investments;
- Addressing the investment backlog through accessible financing and capacity building;
- Establishing a dedicated European municipal and regional investment facility within the EIB to boost green and digital development;
- Ensuring that local-level contributions to the EU Green Deal are not blocked by rigid budget rules.
Reforming EU economic governance is an opportunity to recognise and unleash the potential of Europe’s cities and regions. A more balanced, investment-friendly approach will strengthen resilience, equity and sustainable growth across the Union.
For more information, contact:
Senior Advisor – Governance & Institutional Relations
