COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN CENTRAL BANK Reflecting the economic governance framework in national fiscal policy
Date: 2025-11-25
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU Member State, budget deficit, budgetary expenditure, budgetary procedure, defence expenditure, economic forecasting, economic situation, euro area, fiscal policy, public debt

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 25.11.2025  COM(2025) 951 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN CENTRAL BANK Reflecting the economic governance framework in national fiscal policy {SWD(2025) 951 final}  
 
 
INTRODUCTION 

Today’s Autumn Package comes at a time of serious challenges, in the EU and globally, 
yet the EU economy is forecast to remain resilient, with continued modest growth. As one 
of  the  world’s  most  open  economies,  the  EU  is  exposed  to  rising  global  trade  restrictions, 
tensions  and  often  unfair  competition  from  other  trade  partners,  compounding  uncertainty 
linked  to  Russia’s  war  of  aggression  against  Ukraine.  Recent  data  indicates  that  economic 
activity expanded at a faster-than-anticipated pace in the first half of 2025, partly due to the 
front-loading  of  goods  production  and  exports  ahead  of  higher  US  import  tariffs.  While 
momentum is  expected to  have  eased in the second half of the year, euro area real  GDP is 
forecast to grow by 1.3% in 2025, slightly above the projections set out in the Commission 
Spring 2025 forecast. While the pace of growth is expected to ease in 2026, resilient consumer 
spending and investment are expected to support real GDP growth of 1.2%1. 

Maintaining fiscal stability is key to underpin sustainable growth and resilience. The EU’s 
reformed fiscal framework, which entered into force in 2024, is now fully operational. Today’s 
Autumn Package marks an important milestone in putting this framework into operation. All 
Member  States  have  submitted  their  medium-term  fiscal-structural  plans  (MTFSP)  and  the 
Council has adopted recommendations setting net expenditure paths2 for each of them3.  

This  Communication  takes  stock  of  fiscal  developments  in  2025  and  the  budgetary 
outlook for 2026, assessing Member States’ compliance with the EU fiscal framework. 
The scope of this communication extends to all Member States, with a specific focus on the 
euro area. Euro area Member States have submitted their Draft Budgetary Plans (DBPs) for 
2026 to the Eurogroup and the Commission, and the Commission has adopted opinions on each 
of those DBPs. Moreover, this Communication assesses whether Member States in excessive 
deficit procedure (EDP) are delivering effective action in response to the respective Council 
Recommendations4. 

The EU fiscal framework accommodates the necessary increase in defence expenditure. 
In response to the current geopolitical context and heightened security challenges stemming 
from Russia’s war of aggression against Ukraine, the Commission invited Member States to 
request  the  activation  of  national  escape  clauses  for  defence  under  the  Readiness  2030 
initiatives5.  The  national  escape  clauses  provide  Member  States  with  flexibility  to  increase 
defence expenditure, without an immediate need to finance such increase with spending cuts 
or revenue-raising measures. The flexibility thus gives Member States the necessary time to 
accommodate higher defence expenditure within national budgets. It allows Member States to 

1   The  Commission  published  the  Autumn  2025  Forecast  on  the  17  November  2025  and  the  European 

2  

Macroeconomic Report (SWD(2025) 957) on the 25 November 2025. 
‘Net  expenditure’  means  government  expenditure  net  of  interest  expenditure,  discretionary  revenue 
measures, expenditure on programmes of the Union fully matched by revenue from Union funds, national 
expenditure on co-financing of programmes funded by the Union, cyclical elements of unemployment benefit 
expenditure, and one-offs and other temporary measure (Regulation (EU) 2024/1263, Article 2). 

3         The Council recommendation setting out the net expenditure paths for each Member State is available under 
tab  https://economy-finance.ec.europa.eu/economic-surveillance-eu-member-

fiscal 

the 
surveillance 
states/country-pages_en.  

4   The Autumn package includes a report under Article 126(3) of the Treaty of the Functioning of the European 

Union.  

5   The  Commission  and  the  High  Representative  have  presented  a  White  Paper  for  European  Defence  – 

Readiness 2030 on 19 March 2025.   

1 

 
 
 
temporarily deviate from the net expenditure path recommended by the Council, provided that 
those deviations are related to increases in defence spending, by up to 1.5% of GDP over the 
next four years. So far, the Council has activated the national escape clause for 16 Member 
States  (Belgium,  Bulgaria,  Croatia,  Czechia,  Denmark,  Estonia,  Finland,  Germany,  Greece, 
Hungary, Latvia, Lithuania, Poland, Portugal, Slovakia, and Slovenia).  

This Communication is structured into two sections. Section I provides an overview of the 
fiscal situation in the euro area, including the outlook for the years ahead, based on Member 
States’ DBPs and the Commission Autumn 2025 Forecast. It examines the overall fiscal stance 
and its underlying components, as well as assessing the appropriateness of the fiscal stance, in 
the euro area as a whole. Section II focuses on the Commission’s assessment of Member States’ 
compliance with the ceilings for net expenditure growth as recommended by the Council. For 
euro area Member States, the assessment takes into account the information provided in their 
Draft Budgetary Plans. For Member States subject to an EDP the assessment takes into account 
the  Member  States’  reporting  on  action  taken  in  response  to  the  respective  Council 
Recommendations. Finally, section II contains a synopsis of the report under Article 126(3) 
TFEU, on the basis of which the Commission considers new cases for opening an EDP. The 
annexes provide the underlying analysis and data.  

I.  FISCAL DEVELOPMENTS AND FISCAL STANCE IN THE EURO AREA  

The  aggregate  euro  area  general  government  deficit  is  expected  to  slightly  increase  in 
both 2025 and 2026. According to the Commission Autumn 2025 Forecast, the aggregate euro 
area deficit is projected to increase from 3.1% of GDP in 2024 to 3.2% of GDP in 2025. On 
the basis of current policies, the deficit is expected to rise to 3.3% of GDP in 2026.  

After declining substantially in previous years, the aggregate euro area debt-to-GDP ratio 
has started to rise in 2025 and is expected to increase to 89.8% of GDP at end-2026, from 
around 88% at end-2024. This increase is driven by persistent primary deficits and some debt-
increasing  stock-flow  adjustments.  Additionally,  the  interest–growth  rate  differential 
(“snowball effect”) is set to become less favourable as the implicit interest rate paid on debt 
increases while inflation (GDP deflator) moderates further. Four Member States are forecast to 
have debt ratios in excess of 100% next year. 

2 

 
 
 
 
Graph 1. The euro area fiscal stance and components 2024-2026 (% of GDP) 

Source: Commission Autumn 2025 Forecast 

The euro area fiscal stance is projected to be broadly neutral in 2025 and 20266. Reflecting 
the  implementation  of  the  medium-term  plans,  Member  States  have  restrained  nationally-
financed  current  expenditure  growth  and/or  increased  revenues  in  2025.  This  restraint  has 
largely been offset by an expansion in nationally financed investment (mainly for defence) and 
expenditure financed by grants7 under the Recovery and Resilience Facility (RRF) and other 
EU funds. As a result, the overall fiscal stance in 2025 is expected to be broadly neutral. The 
aggregate euro area fiscal stance is expected to remain broadly neutral also in 2026, as some 
small restraint in net current and other capital expenditure is offset by the increasing absorption 
of RRF grants, in its last year of implementation, and other EU funds. Importantly, defence 
spending is also projected to rise steadily, increasing from 1.4% of GDP in 2024 to 1.7% in 
2026.  

Euro area public investment is expected to expand further in 2026, driven by a mix of 
national  and  EU  financing.  Investment  is  set  to  provide  some  further  expansionary 
contribution  to  the  euro  area  fiscal  stance  in  2026.  Public  investment  in  the  euro  area  is 
projected to reach 3.7% of GDP by 2026, from 3.0% in 2019. The increase between 2019 and 
2026 has been supported by both the national and the EU budgets, especially the RRF. Defence 
investment is also gaining momentum, with around 1/3 of the projected increase in investment 
in 2025-2026 due to higher defence investment.  

6   The fiscal stance measures the short-term impulse to the economy from discretionary fiscal policy. 
7       The term ‘grants’ refers to public expenditure financed by non-repayable support (“grants”) from the RRF 

and other EU funds. 

3 

 
 
 
 
 
 
 
 
 
 
Graph 2. Euro area public investment 2019-2026 (% GDP) 

Source: Commission Autumn 2025 Forecast 

The  euro  area  fiscal  stance  appears  broadly  appropriate  in  both  2025  and  2026.  The 
broadly neutral stance is consistent with the decline in inflation and its projected stabilisation 
around  2%,  and  with  the  need  to  preserve  a  still  moderate  growth  outlook  in  an  uncertain 
environment. It is coherent with euro area Member States’ efforts to comply with the maximum 
growth rates of net expenditure recommended by the Council and the use of flexibility under 
the national escape clause for defence.  

The composition of the fiscal  stance  is  appropriate. The  consolidation of national  public 
finances,  driven  by  the  slowdown  in  net  current  expenditure,  broadly  corresponds  to  the 
adjustment  needs  reflected  in  the  recommended  net  expenditure  paths,  especially  in  high-
deficit and high-debt  countries. At the same time, RRF and other EU  funding  contribute to 
neutralising  the  contractionary  impact  of  this  consolidation.  Moreover,  the  increase  in 
investment – both through national financing and RRF funding – supports the EU’s priorities 
and growth potential. In 2026, there continues to be a need to support the build-up of Member 
States’ defence capabilities, while ensuring that Member States with adjustment needs continue 
their fiscal efforts, especially on non-defence spending.    

II.  ASSESSMENT  OF  DRAFT  BUDGETARY  PLANS,  OF  EFFECTIVE  ACTION  BY  MEMBER 
STATES  IN  EXCESSIVE  DEFICIT  AND  OF  THE  FISCAL  SITUATION  IN  OTHER  MEMBER 
STATES 

(i) 

Approach to assess compliance with the EU fiscal framework  

Under the reformed economic governance framework, the growth of net expenditure is 
the  single  operational  indicator  to  monitor  Member  States’  compliance  with  the 
respective Council recommendations. As part of their medium-term plans, Member States 
commit to maximum growth rates of net expenditure expressed in annual and cumulative terms 
and,  in  case  an  extension  of  the  adjustment  period  is  requested,  to  a  set  of  reforms  and 

4 

 
 
 
 
 
 
 
investments8. Once endorsed by the Council, these maximum growth rates or ceilings become 
the benchmarks for the assessments of compliance during the lifetime of the plans. For Member 
States subject to an EDP, the corrective net expenditure paths established by the Council are 
the benchmark for compliance. Nine Member States are currently subject to an EDP: Austria, 
Belgium, France, Hungary, Italy, Malta, Poland, Romania and Slovakia. Member States for 
which  the  Council  has  activated  the  national  escape  clause  for  defence  spending  can 
temporarily  deviate  from  their  recommended  maximum  growth  rates  for  net  expenditure, 
provided that those deviations are related to increases in defence spending by up to 1.5% of 
GDP  over  the  period  2025  to  2028.  This  concerns  16  Member  States:  Belgium,  Bulgaria, 
Czechia, Denmark, Germany, Estonia, Greece, Croatia, Latvia, Lithuania, Hungary, Poland, 
Portugal, Slovenia, Slovakia and Finland.  

The Commission’s assessment of compliance is based on the Commission Autumn 2025 
Forecast  and  highlights  risks  to  compliance  with  a  view  to  ensuring  that  the  Union’s 
policy guidance can be appropriately integrated in the national budgetary preparations. 
The Commission forecast takes into account information provided by the Member States in 
their Draft Budgetary Plans for 2026 (for euro area Member States), in their reports on effective 
action  (for  EDP  countries)9,  and  –  more  in  general  –  the  national  budgets  of  all  Member 
States10. The assessment of compliance is based on a comparison of net expenditure growth as 
projected  by  the  Commission  Autumn  2025  Forecast  with  the  maximum  net  expenditure 
growth  recommended  by  the  Council,  taking  into  account  the  flexibility  provided  by  the 
national escape clause for defence for the 16 Member States mentioned above11. Box 1 provides 
a  comprehensive  overview  of  how  the  Commission  has  undertaken  its  assessment  of 
compliance, which substantiates the findings presented in this Communication.  

8   Eight Member States have committed to reforms and investments to underpin an extension of the adjustment 

period: Austria, Belgium, Germany, France, Italy Finland, Spain and Romania.   

10  

9   An  overview  of  ongoing  and  closed  excessive  deficit  procedures  is  available  here.  The  Council 
recommendations under Article 126(7) on the correction of the excessive deficit require Member States in 
EDP  to  report  on  action  taken  in  response  to  the  recommendation  on  a  six-monthly  basis.  For  euro  area 
countries in EDP, the DBP can serve as the report on effective action. 
In accordance with the legal requirements, macroeconomic forecasts underpinning the national budgets must 
be  independently  produced  or  endorsed.  In  some  Member  States  (Belgium,  Luxembourg,  Netherlands, 
Austria and Slovenia), the forecasts are produced by a national independent fiscal institution (IFI). In other 
Member States the macroeconomic forecast is endorsed by the national IFI (Cyprus, Estonia, Greece, Spain, 
Croatia,  Ireland,  Italy,  Lithuania,  Latvia,  Malta  and  Portugal)  or  by  an  independent  expert  committee 
(Germany and Slovakia). In France the IFI assesses the macroeconomic forecasts. In Finland, a department 
of  the  Ministry  of  Finance  produces  the  macroeconomic  forecast  in  line  with  the  EU  legal  requirements 
regarding functional independence, but there is no official endorsement by an IFI. Some non-euro area IFIs 
also assess or endorse the macroeconomic forecasts used in annual budgets.  

11   The  defence  spending  relevant  to  the  assessment  of  compliance  is  the  nationally  financed  defence 
expenditure as defined in the Classification of the functions of government (COFOG) in the framework of 
the European System of National Accounts (ESA2010). 

5 

 
 
 
 
 
 
 
 
 
Box 1. Commission’s assessment of Member States’ compliance with the Council 
Recommendations 
In the autumn 2025 round of fiscal surveillance, the core of the Commission’s assessment of 
the  fiscal  developments  and  prospects  in  the  Member  States  consists  in  comparing  the 
Commission’s projections for net expenditure growth to the maximum growth rates of net 
expenditure  as  recommended  by  the  Council.  The  latter  are  set  either  in  the  Council 
Recommendations  endorsing  Member  States’  medium-term  plans  or  in  the  Council 
Recommendations with a view to bringing an end to the situations of excessive deficit. For 
euro area Member States, the Commission provides this  assessment in  its opinion on the 
Draft Budgetary Plans.  

For  all  Member  States,  deviations  from  the  recommended  maximum  growth  rates  of  net 
expenditure are recorded in annual and cumulated terms since the base year of the relevant 
recommendation,  which  usually  corresponds  to  the  year  before  the  endorsement  of  a 
medium-term plan12.  

A  Member  State  is  assessed  to  be  compliant  when  net  expenditure  growth  is  within  the 
ceilings recommended by the Council.  

Where  expenditure  growth  is  higher  than  recommended  (i.e.  positive  deviations),  the 
Commission considers the size of the deviation in relation to the thresholds of 0.3% of GDP 
in annual terms and 0.6% of GDP in cumulated terms13. A deviation remaining below these 
thresholds entails a risk of non-compliance, while a deviation above these thresholds entails 
a risk of material non-compliance.  

Moreover,  for  Member  States  in  EDP,  positive  deviations  in  excess  of  either  of  these 
thresholds  would  entail  a  strong  presumption  of  non-effective  action  and  could  lead  to  a 
stepping up of the procedure14. At the current juncture, there is no outturn data for 2025 and 
a  stepping-up  of  the  procedure  would  only  be  considered  if  the  comparison  between  net 
expenditure growth projected in the Commission forecast and the recommended corrective 
net expenditure path (taking the flexibility for defence spending under the national escape 
clause  into  consideration  as  appropriate)  pointed  to  a  particularly  serious  case  of  non-
compliance. Else, the EDP is kept in abeyance. For Member States that are not in EDP but 
register  a  debt  ratio  above  60%  of  GDP,  positive  deviations  in  excess  of  either  of  these 
thresholds  would  trigger  the  preparation  of  a  Report  under  Article  126(3)  TFEU  when 
confirmed by outturn data. In this case, the report would assess compliance with the debt 
criterion and could lead to a debt-based EDP. 

For the 16 Member States for which the Council has activated the national escape clause for 
defence  spending,  the  assessment  of  compliance  includes  a  check  whether  an  upward 

12   For detailed country-specific tables underpinning the assessment see the Fiscal Statistical Tables providing 
background data relevant for the assessment of the budgetary policies of the Member States,  SWD(2025) 
951 final, Brussels 25.11.2025 

13   Article 2(2) of the amended Regulation (EC) No 1467/97. 
14   Stepping  up  the  procedure  means  that  the  Commission  recommends  to  the  Council  to  adopt  a  decision 

establishing no effective action under Article 126(8).  

6 

 
 
 
deviation from the recommended maximum growth of net expenditure in cumulative terms 
is  explained by a corresponding  increase in  defence expenditure compared to  a reference 
year, of up to 1.5% of GDP over the period 2025 to 2028. If a deviation can be fully explained 
by a projected increase in defence expenditure compared to the reference year, the Member 
State is considered to be compliant with its recommendation.  

In its assessment of compliance based on net expenditure growth, the Commission also takes 
into  account  the  overall  budgetary  position  of  a  Member  State  i.e.,  whether  it  is  close  to 
balance or in surplus. 

(ii)  Member States that have submitted a Draft Budgetary Plan 

For euro area Member States, the DBPs outline the expenditure and revenue measures 
that they intend to implement in 2026. Most euro area Member States have submitted their 
DBPs for 2026 in line with the legal deadline of mid-October. Belgium and Spain have not yet 
submitted a DBP, as no budget for 2026 was tabled in their Parliaments15. Austria submitted a 
DBP covering both 2025 and 2026 on 13 May 2025 and the Commission issued an opinion on 
23 June 202516. Member States in EDP could use the Draft Budgetary Plan also to report on 
effective action taken under the EDP.  

A)  Member States in EDP 

Three euro area Member States in EDP are projected to be compliant with the recommended 
maximum growth of net expenditure. 

•  For Italy, net expenditure in 2025 and 2026 is projected to grow within the ceilings 

recommended by the Council. As a result, the EDP is held in abeyance. 

•  For  Slovakia,  net  expenditure  in  2025  is  projected  to  grow  within  the  ceilings 
recommended by the Council, while net expenditure growth in 2026 is projected to be 
above the ceiling recommended by the Council. However, the projected  deviation is 
expected to be within the flexibility provided by the national escape clause for defence. 
As a result, the EDP is held in abeyance.   

•  For France, net expenditure growth in 2025 is projected to be slightly above the ceiling 
recommended by the Council but the deviation does not exceed 0.3% of GDP, beyond 
which  there  would  be  a  strong  presumption  of  no  effective  action.  Conversely,  net 
expenditure  in  2026  is  projected  to  grow  within  the  ceiling  recommended  by  the 
Council.  As  a  result,  the  EDP  is  held  in  abeyance.  The  Commission  notes  that  this 
assessment  is  surrounded  by  considerable  uncertainty  in  view  of  the  ongoing 
parliamentary discussions. 

15   The  Commission  keeps  monitoring  fiscal  developments  in  Belgium  and  Spain,  and  has  considered  all 
relevant policy  measures  when  preparing  its  Autumn forecasts.  Spain  has  not  submitted  a  DBP  for  2025 
either. 

16   The Commission opinion concluded that, the Draft Budgetary Plan of Austria for 2025 and 2026 is in line 
with the provisions of the Stability and Growth Pact. Commission Opinion on the Draft Budgetary Plan of 
Austria, 23.06.2025, COM(2025) 4106 final. 

7 

 
 
  
 
One euro area Member State in EDP is projected to be at risk of material non-compliance 
with the recommended maximum growth of net expenditure. 

•  For Malta, net expenditure in 2025 and 2026 (in annual terms) is projected to grow 
within the ceilings recommended by the Council. However, given a large deviation in 
2024, the cumulative deviation in both 2025 and 2026 is well above 0.6% of GDP in 
both years, entailing a strong presumption of no effective action. While the EDP is held 
in  abeyance  at  this stage in  the absence of outturn data for 2025, Malta is  at  risk of 
material  non-compliance  and  may  therefore  fall  short  of  delivering  effective  action, 
which  could  require  a  stepping  up  of  the  EDP.  It  should  however  be  noted  that  a 
correction of the excessive deficit in 2026 is within reach in view of the large revenue 
windfalls that occurred in 2024. 

B)  Member States not in EDP 

Six euro area Member States not in EDP are projected to be compliant with the recommended 
maximum growth of net expenditure. 

•  For Finland17 and Luxembourg, net expenditure in 2026 is projected to grow within 

the ceilings recommended by the Council. 

•  For Germany, Estonia, Greece and Latvia net expenditure growth is projected to be 
above the ceiling recommended by the Council. However, the deviations projected for 
these Member States are expected to be within the flexibility provided by the national 
escape clause for defence.  

Three euro area Member States not in EDP are deemed to be compliant with the budgetary 
policy  obligations  of  the  Stability  and  Growth  Pact  thanks  to  a  budgetary  position  close  to 
balance  or  in  surplus  although  net  expenditure  growth  is  projected  to  be  above  the 
recommended maximum growth of net expenditure. 

•  The budgetary positions of Ireland, Cyprus and Portugal are projected to be in surplus 
(Ireland and Cyprus) or close to balance (Portugal), thus contributing to a reduction in 
the  government  debt-to-GDP  ratio.  At  the  same  time,  the  Commission  notes  that 
Ireland is at risk of exceeding the recommended maximum growth of net expenditure 
while  Cyprus  and  Portugal  are  at  risk  of  materially  exceeding  the  recommended 
maximum growth of net expenditure. 

Three euro area Member States not in EDP are projected to be at risk of non-compliance with 
the recommended maximum growth of net expenditure. 

•  For Croatia, Lithuania and Slovenia, net expenditure growth in 2026 is projected to 
be above the ceiling recommended by the Council. However, after taking into account 
the  flexibility  provided  by  the  national  escape  clause  for  defence,  the  projected 
cumulative deviation in 2026 is below 0.6% of GDP. 

17   However, the Commission is of the view that Finland does not fulfil the deficit criterion of Article 126 TFEU, 
and that, while the Council has activated the national escape clause for Finland, the deficit in excess of the 
reference value in 2025 is not fully explained by the increase in defence expenditure (see below).  

8 

 
 
 
One euro area Member State not in EDP is projected to be at risk of material non-compliance 
with the recommended maximum growth of net expenditure. 

•  For the Netherlands, net expenditure growth in 2026 is projected to be well above the 
ceiling recommended by the Council as both the annual and the cumulated deviations 
are above 0.3% and 0.6% of GDP, respectively. 

(iii)  Member  States  in  Excessive  Deficit  Procedure  that  have  not  submitted  a  Draft 

Budgetary Plan 

For euro area Member States in EDP that have not submitted a DBP in autumn and for non 
euro  area  Member  States  in  EDP,  the  Commission  has  also  undertaken  an  assessment  of 
effective action on the basis of its forecast. As a result, the EDP is held in abeyance for all 
concerned Member States.  

•  For Austria, net expenditure in 2025 and 2026 (in both annual and cumulative terms) 
is projected to grow within the ceilings recommended by the Council. The Commission 
2025 Autumn Forecast for Austria integrates the policy measures already laid out in the 
DBP submitted on 13 May 2025 as well as more recent information. Austria is therefore 
projected to be compliant with the recommended maximum growth of net expenditure. 

•  For  Belgium  and  Poland,  net  expenditure  growth  in  2025  and  2026  (in  cumulative 
terms) is projected to be above the ceilings established by the corrective path. However, 
the deviations are expected to be within the flexibility provided by the national escape 
clause for defence. Belgium and Poland are therefore projected to be compliant with 
the recommended maximum growth of net expenditure. 

•  For  Hungary  net  expenditure  growth  in  2025  and  2026  (in  cumulative  terms)  is 
projected  to  be  above  the  ceilings  established  by  the  corrective  path.  In  2025,  the 
cumulative deviation is expected to be within the flexibility provided by the national 
escape clause for defence and in 2026 it remains below 0.6% of GDP, beyond which 
there would be a strong presumption of no effective action. While the EDP is held in 
abeyance at this stage, Hungary is at risk of non-compliance in 2026 and may therefore 
fall short of delivering effective action, which could require a stepping up of the EDP. 

•  For Romania, net expenditure growth in 2025 is projected to be only slightly above the 
ceiling recommended by the Council  (0.1% of GDP) and net expenditure in 2026 is 
projected to grow well within the ceiling recommended by the Council. This is thanks 
to the fiscal consolidation packages adopted by Romania over the summer. As a result, 
the EDP is held in abeyance. Accordingly, the Commission will not at this time propose 
a  suspension  of  EU  funds  under  the  procedure  of  macroeconomic  conditionality,  in 
accordance with the Common Provisions Regulation and the RRF Regulation. At the 
same time, in the short term, it will be crucial for Romania to rigorously implement the 
fiscal  consolidation  measures  adopted  in  recent  months  and  to  streamline  public 
investment. In addition, as highlighted in the Council recommendation under Article 
126(7)  TFEU  of  8  July  2025,  Romania  should  strengthen  its  tax  administration  and 
budgetary process to avoid overspending relative to plans. The implementation of these 

9 

 
 
policy  commitments  will  contribute  to  ensuring  continued  effective  action.  In  the 
medium  term,  further  fiscal  consolidation  measures  will  be  needed  to  correct  the 
excessive deficit by 2030.  

(iv)  Other Member States 

The Commission has also assessed compliance with the recommended maximum growth of 
net expenditure for the other Member States on the basis of its forecast.  

•  For Czechia and Denmark, net expenditure growth in 2026 is projected to be above 
the ceiling recommended by the Council. However, the deviations projected for these 
Member States are expected to be within the flexibility provided by the national escape 
clause for defence. Czechia and Denmark are therefore projected to be compliant with 
the recommended maximum growth of net expenditure. 

• 

In  Sweden  net  expenditure  growth  in  2026  is  projected  to  be  above  the  ceiling 
recommended by the Council and exceeding 0.3% of GDP. However, given the results 
for 2024 and 2025, net expenditure in cumulative terms in 2026 is within the ceiling 
recommended by the Council. Sweden is therefore projected to be compliant with the 
recommended maximum growth of net expenditure. 

•  For  Spain,  net  expenditure  growth  in  2026  is  projected  to  be  above  the  ceiling 
recommended by the Council, but the deviation is below 0.3% (annual) and 0.6% of 
GDP (cumulated). Spain is therefore projected to be at risk of non-compliance with the 
recommended maximum growth of net expenditure in 2026.  

•  For Bulgaria18, net  expenditure growth in  2026 is  projected to  be  above the  ceiling 
recommended  by  the  Council,  taking  into  account  the  flexibility  provided  by  the 
national escape clause for defence. Bulgaria is therefore projected to be at risk of non-
compliance with the recommended maximum growth of net expenditure in 2026.  

(v) 

Report under Article 126(3) 

As part of the 2025 Autumn Package, the Commission has adopted a report under Article 
126(3) TFEU covering Germany and Finland19. For Finland, the report is triggered by the 
2024 deficit exceeding the 3% of GDP reference value and a planned deficit above 3% of GDP 
for 2025; for Germany, it is the planned deficit for 2025 that is above 3% of GDP. The report 
finds that there is no case to open an EDP for Germany at this stage because the excess in the 
deficit beyond 3% of GDP is fully explained by the increase in defence spending and allowed 
by the national escape clause. In Finland, the deficit in excess of 3% of GDP in 2025 can only 
be partly explained by the increase in defence spending and the flexibility granted under the 

18   Following  accession  to  the  euro  area  on  1  January  2026  Bulgaria  will  be  subject  to  the  same  reporting 

obligations as all other euro area Member States, including the submission of a DBP in autumn.  

19   Report from the Commission, prepared in accordance with Article 126(3) of the Treaty on the Functioning 
of the European Union, 25.11.2025, COM(2025)  950 final..  That report analyses the government deficits 
against the requirements of the Treaty in order to conclude on whether there is a risk of an excessive deficit 
in a Member State. The Commission opinions on the Draft Budgetary Plans on the other hand analyse the 
net expenditure projected for 2026 against the relevant Council recommendations. 

10 

 
 
 
national  escape  clause.  Therefore,  the  Commission  will  consider  proposing  to  open  an 
excessive deficit procedure for Finland. 

(vi)  Conclusions and next steps 

Member States are invited to take into account, in the process of adopting their budget 
law, the Commission opinion on their draft budgetary plan. The 19 Member States that are 
assessed  to  be  compliant  are  invited  to  continue  implementing  fiscal  policies  in  2026  as 
planned.  In  turn,  the  8  Member  States  at  risk  of  non-compliance  are  invited  to  take  the 
necessary measures within their national budgetary process to ensure that fiscal policy in 2026 
is in line with the Council Recommendation. In particular, for Member States in EDP, this is 
important  to  avoid  a  possible  stepping  up  of  the  excessive  deficit  procedure  in  spring.  The 
Commission stands ready to engage with all Member States and to support efforts to ensure 
compliance with the revised economic governance framework. 

The  Commission  will  consider  proposing  to  open  an  excessive  deficit  procedure  for 
Finland. For Finland, in light of the report under Article 126(3) TFEU and after taking into 
consideration  the  Opinion  of  the  Economic  and  Financial  Committee  under  Article  126(4) 
TFEU,  the  Commission  will  consider  proposing  to  the  Council  to  adopt  a  Decision  under 
Article 126(6) TFEU establishing the existence of an excessive deficit. If the Council decides 
that an excessive deficit exists, the Council will at the same time also adopt a recommendation, 
in accordance with Article 126(7) TFEU, setting out a corrective net expenditure path.  

The  Commission  will  provide  an  updated  assessment  in  spring  2026.  The  updated 
assessment of compliance will be based on outturn data for 2025, the Commission Spring 2026 
Forecast and the Annual Progress Reports which must be submitted by Member States by 30 
April 202620. The fiscal assessment will entail the Commission’s first calculation of the control 
account for each Member State based on outturn data. This control account will keep track of 
deviations  from  the  net  expenditure  growth  path  for  all  Member  States  and  will  be  used to 
inform  enforcement  actions21.  Moreover,  the  assessment  in  spring  will  also  monitor  the 
implementation of reforms and investments underpinning the extension of the fiscal adjustment 
periods  to  seven  years,  which  concerns  Spain,  France,  Italy,  Finland,  Belgium,  Austria, 
Germany and Romania. 

20   For countries in EDP, the spring 2026 report on action taken in response to the Council recommendation 
under Article 126(7) on the correction of the excessive deficit can be subsumed under the Annual Progress 
Report. 

21   See  also  Box  1  for  a  description  of  possible  surveillance  steps  in  case  of  a  positive  deviation  from  the 
recommended maximum growth of net expenditure. A detailed explanation of the control account is included 
in  the  Fiscal  Statistical  Tables  providing  background  data  relevant  for  the  assessment  of  the  budgetary 
policies of the Member States, SWD(2025) 951 final, Brussels 25.11.2025. 

11 

 
 
 
 
 
 
 
 
 
ANNEX I: ANNUAL AND CUMULATED DEVIATIONS OF NET EXPENDITURE GROWTH IN 2025 
AND 2026 VIS-À-VIS THE RECOMMENDATIONS  

12 

Annual and cumulated deviations (% GDP)202520262025202620252026(A)(B)(C)(D)(E)(F)(G)(H)Member States that have submitted a Draft Budgetary PlanDE-0.30.3-0.30.0Yes2021-0.8-0.7EE-2.72.9-2.01.0Yes2021-3.5-0.5IE0.5-0.10.20.1Non.a.n.a.n.a.EL0.01.2-1.00.2Yes2024-1.2-0.1FR0.1-0.3-0.2-0.4Non.a.n.a.n.a.HR1.30.30.81.1Yes20210.30.5IT-0.10.0-0.2-0.2Non.a.n.a.n.a.CY0.30.5-0.10.5Non.a.n.a.n.a.LV0.30.7-1.2-0.5Yes2021-2.0-2.0LT1.10.81.11.8Yes2021-0.40.3LU0.5-0.2-0.3-0.4Non.a.n.a.n.a.MT-0.5-0.42.01.5Non.a.n.a.n.a.NL1.50.51.31.7Non.a.n.a.n.a.PT0.30.00.80.7Yes20210.70.7SI1.00.60.20.8Yes20210.00.2SK-0.50.3-1.4-1.0Yes2021-2.3-1.5FI-0.2-0.1-0.4-0.5Yes2021-2.0-2.4Member States in Excessive Deficit Procedure that have not submitted a Draft Budgetary PlanBE0.30.20.30.5Yes2021-0.2-0.3HU1.31.30.61.9Yes2021-0.50.5AT-0.20.0-0.2-0.2Non.a.n.a.n.a.PL0.3-0.10.60.5Yes2021-0.9-1.0RO0.1-1.00.1-0.9Non.a.n.a.n.a.Other Member StatesBG1.3-0.51.30.7Yes20240.10.2CZ-0.51.0-2.1-1.0Yes2021-2.5-1.5DK2.10.50.40.8Yes2021-1.1-0.7ES0.30.3-0.10.2Non.a.n.a.n.a.SE-1.00.9-1.0-0.1Non.a.n.a.n.a.Source: Commission calculations based on Commission 2025 Autumn ForecastNational escape clause (NEC)A positive deviation indicates net-expenditure exceeding the recommendation. Annual deviationCumulated deviationCumulated deviation taking into account flexibiliy from NECReference year for NEC 
 
 
 
 
ANNEX II: KEY MACROECONOMIC AND FISCAL INDICATORS 

13 

General government balance, debt and GDP growth202420252026202420252026202420252026Member States that have submitted a Draft Budgetary PlanDE-2.7-3.1-4.062.263.565.2-0.50.21.2EE-1.7-1.3-4.423.523.425.9-0.10.62.1IE4.01.51.038.333.132.52.610.70.2EL1.21.10.3154.2147.6142.12.12.12.2FR-5.8-5.5-4.9113.2116.3118.11.20.70.9HR-1.9-2.8-2.957.456.256.13.83.22.9IT-3.4-3.0-2.8134.9136.4137.90.70.40.8CY4.13.33.062.856.451.03.93.42.6LV-1.8-3.1-3.546.648.349.90.01.01.7LT-1.3-2.2-2.538.039.844.73.02.43.0LU0.9-0.8-0.526.326.827.10.40.91.9MT-3.5-3.2-2.846.247.047.26.84.03.8NL-0.9-1.9-2.743.745.247.91.11.71.3PT0.50.0-0.393.691.389.22.11.92.2SI-0.9-2.2-2.366.665.263.71.71.02.4SK-5.5-5.0-4.659.761.964.01.90.81.0FI-4.4-4.5-4.082.588.190.90.40.10.9Member States in Excessive Deficit Procedure that have not submitted a Draft Budgetary PlanBE-4.4-5.3-5.5103.9107.1109.91.11.01.1HU-5.0-4.6-5.173.573.773.90.60.42.3AT-4.7-4.4-4.179.981.482.8-0.70.30.9PL-6.5-6.8-6.355.159.564.93.03.23.5RO-9.3-8.4-6.254.859.161.10.90.71.1Other Member StatesBG-3.0-3.0-2.723.828.530.63.43.02.7CZ-2.0-1.8-2.043.343.444.11.22.41.9DK4.52.31.130.528.927.73.52.02.1ES-3.2-2.5-2.1101.6100.098.23.52.92.3SE-1.6-1.7-2.434.034.535.30.81.52.6Source: Commission 2025 Autumn ForecastGeneral government balance (% GDP)General government debt (%GDP)GDP (real growth rate) 
 
 
 
 
ANNEX III: OVERALL EURO AREA FISCAL SITUATION AND FISCAL STANCE 

(i)  Government deficit and its drivers in 2025-2026 

The general government deficit is expected to increase in 2025 and 2026 in the euro area 
as a whole, with important heterogeneity across countries. In 2026, the deficit is expected 
to increase compared to 2025 in 12 countries. Eight euro area Member States are set to have a 
deficit above 3% of GDP and among them seven are expected to have a deficit at or larger than 
4%.   

Graph 3. Euro area Member States general government balance in 2026  

Source: Commission Autumn Forecast 2025 
Note: Bulgaria's euro area accession is scheduled for 1 January 2026. The aggregate EA20 does not include Bulgaria. 
Member States with an asterisk* have an EDP open. 

Spending developments are acting as a key driver for the euro area deficit. The euro area 
expenditure-to-GDP ratio is  projected to  increase by 0.5 pps  and 0.3 pps  in  2025 and 2026 
respectively. Defence spending is projected to rise steadily (from 1.4% of GDP in 2024 to 1.7% 
in 2026), and interest  expenditure is also set to increase as a share of GDP. Investment has 
expanded in most Member States in 2026, supported by both national and EU funding. Almost 
half  of  the  increase  in  public  investment  between  2019  and  2026  is  related  to  investment 
financed by the EU, particularly by the RRF. Most euro area countries are projected to spend 
more on nationally-financed public investment than they did prior to the pandemic. Italy and 
Lithuania stand out with an increase above 1% of GDP. From a functional perspective, defence 
spending is also expected to increase in the majority of the EU countries in 2026. Significant 
increases are expected in Estonia (above 1pp) and Latvia (around 1pp). It should be noted that 
the timing around the delivery of military equipment may create some volatility in the numbers 
from year to year. 

14 

 
 
 
 
 
 
 
 
 
 
Graph 4. Components of euro area Member States public investment (2026) 

Source: Commission Autumn 2025 Forecast 

(ii) Government debt in 2025-2026 

Developments in public debt ratios are forecast to vary across euro area countries in 2025 
and  2026,  depending  on  consolidation  efforts  and  macroeconomic  developments.  After 
declining significantly in most euro area Member States between 2000 and 2024, the debt ratio 
is projected to rise in 14 euro area Member States over 2025-2026.  By 2026, four Member 
States (Belgium, Greece, France and Italy) are set to continue having debt ratios above 100% 
of GDP. At the same time, further large debt declines are projected in Greece and Cyprus thanks 
to their sizeable primary surpluses. 

Graph 5. Drivers of the yearly change in debt-to-GDP ratio in the euro area (2022-2026) and its 
Member States (2026) 

15 

 
 
 
 
 
 
 
 
 
Source:  Commission Autumn 2025 Forecast 

In the majority of euro area Member States, the change in the debt ratio between 2026 
and 2025 is driven by the primary balance and some stock-flow adjustments. Stock-flow 
adjustments are expected to be particularly important (above 1pp of GDP) in Greece, Portugal, 
Ireland, Italy, Lithuania and the Netherlands. The ‘snowball’ effect would continue to have a 
debt-decreasing impact, as the interest-growth rate differential is expected to remain favourable 
in all Member States except Italy, although it is significantly smaller than in previous years, 
mainly due to lower inflation and higher implicit interest rates paid on public debts.  

(iii) The fiscal stance in euro area countries: 2025 and 2026 

The fiscal stance projected in the euro area for 2025 is broadly neutral, with significant 
heterogeneity across countries22.  The contraction in net current expenditure is expected to 
be largely offset by an expansionary impulse from public investment and EU-funded spending. 
However, fiscal  developments remain heterogeneous across Member States, ranging  from  a 
contraction of 1.4% of GDP in Estonia to an expansion of 1.5% of GDP in Latvia (Graph 6). 
This  heterogeneity  can  be  attributed  partly  to  the  design  of  the  new  economic  governance 
framework, which differentiates fiscal adjustment requirements based on Member States’ fiscal 
challenges, and partly to the different fiscal impulse from expenditure financed by RRF grants 
and other EU funds. 

In particular, five euro area Member States are expected to implement contractionary 
fiscal  policies in 2025, while  nine  Member States pursue expansionary policies and  six 
maintain a broadly neutral stance. Among the high-debt Member States, a contractionary 
contribution from net current expenditure is projected to be the main factor shaping the overall 
fiscal stance in Italy, France, Austria, Slovakia and Finland. This component is expected to be 
expansionary in five out of the ten euro area countries that benefit from flexibility under the 
national escape clause for defence. In most Member States, nationally financed investment—

22   The net expenditure aggregate used to assess the fiscal stance includes expenditure financed by RRF grants 
and other EU funds. The fiscal stance is considered broadly neutral at a value within the -0.25% / +0.25% of 
GDP range while it is considered expansionary (-) or contractionary (+) outside this range. 

16 

 
 
 
 
 
 
particularly expenditure funded through RRF grants and other EU instruments—is expected to 
provide high-quality fiscal support to the economy. In three Member States, the contribution 
from  nationally  financed  investment  is  projected  at  or  above  0.5  percentage  points  of  GDP 
(Finland, Slovakia and Estonia). The contribution from RRF and other EU-funded expenditure 
is  projected  at  or  above  0.5  percentage  point  of  GDP  in  seven  countries  (Estonia,  Greece, 
Croatia, Lithuania, Portugal, Slovakia and Latvia). No euro area Member State is expected to 
record a contraction in this component. 

Graph 6. Fiscal stance and components of euro area Member States, 2025  

Source: Commission Autumn 2025 Forecast 

The euro area aggregate fiscal stance is expected to be neutral in 2026, driven by both 
national  and  EU  budgets.  The  recommended  net  expenditure  paths  by  themselves  would 
entail a broadly neutral fiscal stance for the euro area in 2026, with the flexibility allowed under 
the national escape clause for defence supporting a more expansionary stance. The Commission 
Autumn 2025 Forecast suggests the fiscal stance will  be broadly neutral  in the euro area in 
2026. The expansionary budgets in some Member States as well as the increasing absorption 
of RRF grants and other EU funds (which are not included in net expenditure) are expected to 
be offset by fiscal restraints in other Member States.  

Fiscal stances are expected to remain diverse across euro area countries in 2026. In 2026 
six euro area Member States are expected to implement contractionary fiscal policies, while 
fiscal  policies  are  expected  to  be  expansionary  in  another  ten  Member  States  and  broadly 
neutral in five. Euro area Member States’ 2026 fiscal stances are set to range from a contraction 
of  1.3%  of  GDP  in  Slovakia  to  an  expansion  of  3.0%  of  GDP  in  Estonia.  Net  current 
expenditure is projected to be the main driver of the overall fiscal stance in the majority of euro 

17 

 
 
 
 
 
 
 
 
area Member States, with a significant contraction (0.5% of GDP or more) projected in Finland, 
Austria, Malta, France and Slovakia In most Member States, nationally financed investment 
and especially expenditure financed by RRF grants and other EU funds are expected to provide 
high-quality fiscal support to the economy. In the case of Greece, Portugal and Bulgaria, the 
expansionary stance is largely driven by the projected acceleration in the RRF absorption 

Graph 7. Fiscal stance and components of euro area Member States, 2026 

Source: Commission Autumn 2025 Forecast  

(iv)  Appropriateness of the fiscal stance and the policy mix 

The appropriateness of the fiscal stance can be looked at from three different angles. 

The fiscal stance in 2025 and 2026 is appropriate from a macroeconomic viewpoint.  The 
broadly neutral fiscal stance in 2025 has complemented the ECB’s monetary policy easing as 
inflation continues to fall and high uncertainty is still surrounding the growth outlook. In 2026, 
the broadly neutral fiscal stance is  compatible with the expected stabilisation of inflation at 
around  2%,  while  not  harming  a  still  moderate  growth  outlook  in  a  challenging  global 
environment and in a context of a (small) negative output gap23.     

Secondly,  the  fiscal  stance  appears  appropriate  from  a  composition  standpoint.  Its 
investment  content  in  2025  and  2026  will  stimulate  potential  growth  in  the  medium  term.  
While net current expenditure is set to be restrained reflecting the need to consolidate in several 
Member States, nationally financed investment is preserved. Total investment is also supported 
by an increase in expenditure financed by RRF grants, as RRF implementation speeds up with 
its final implementation date getting closer. Furthermore, the fiscal stance appears compatible 

23   The medium-term potential GDP growth for 2026 in the euro area is estimated at 1.2%. 

18 

 
 
 
 
 
 
 
 
 
 
with the need to ramp up defence spending and the activation of the national escape clause for 
several euro area Member States, while continuing to consolidate the non-defence spending. 

In  terms  of  geographical  breakdown,  the  euro  area  fiscal  stance  for  2025  and  2026 
appears to be broadly consistent with the need for fiscal prudence in Member States with 
high debt challenges. Most Member States with high-debt and high-deficit, are in fact set to 
restrain net expenditure financed by the national budgets. In some high-debt Member States, 
however, the fiscal stance based on the national budgets is not projected to be contractionary 
due to the NEC flexibility for higher defence spending24. The expansionary stance in several 
Member States is also largely driven by the projected acceleration in RRF absorption.  

Graph 8. Monetary policy stance and fiscal policy stance in the euro area 

Source: Commission Autumn 2025 Forecast and ECB 
Note: The monetary policy stance is measured as the overall change of the ECB deposit facility rate in the year. 

24   What  matters  for  fiscal  sustainability  is  the  nationally  financed  part  of  the  fiscal  stance  (i.e.  without  the 
impact of EU funding), which should be slightly contractionary in Member States with high fiscal challenges 

19 

 
 
 
 
 
 
 
 
 
 
 
 
ANNEX IV: EXCESSIVE DEFICIT PROCEDURES 

Since the publication of  the Spring package,  the  Council adopted  revised  recommendations 
under Article 126(7) TFEU for both Romania and Belgium and decided to open the EDP for 
Austria, leading to the adoption of a recommendation under Article 126(7) TFEU for Austria. 
All three Member States were set a deadline of 15 October 2025 to take effective action.   

The paragraphs below provide an assessment of compliance with the EDP recommendation 
(taking  into  account  the  flexibility  allowed  under  the  national  escape  clause  for  defence  as 
appropriate).  For  those  EDP  countries  that  submitted  a  DBP  in  Autumn,  a  more  detailed 
assessment is provided in the DBP opinions, with a focus on 2026. 

Austria: Together with the Council decision establishing the existence of an excessive deficit 
in Austria due to non-compliance with the deficit criterion on 8 July 2025, the Council also 
adopted a recommendation setting out a maximum net expenditure growth path with a view to 
bringing  an  end  to  the  excessive  deficit  situation  by  2028.  According  to  the  Commission 
Autumn 2025 Forecast, Austria’s net expenditure growth is projected to increase by 2.2% in 
2025, which is within the maximum growth rate of 2.6% recommended by the Council. On a 
cumulative basis, net expenditure growth in 2025 also remains within the maximum growth 
rate of 2.6% recommended by the Council. For 2026, net expenditure growth is projected to 
increase by  2.1%,  which is  within the maximum growth  rate of  2.2% recommended by the 
Council.  On  a  cumulative  basis,  net  expenditure  growth  in  2026  also  remains  within  the 
maximum growth rate of 4.8% recommended by the Council. As a result,  Austria complies 
with the maximum growth of net expenditure in the Council Recommendation.  

Belgium: Following the submission, assessment and endorsement of Belgium’s medium term 
fiscal structural plan, the Council adopted a revised recommendation on 20 June 2025, aligned 
with the net expenditure path in Belgium’s medium-term plan, with a view to bringing an end 
to the excessive deficit situation by 2029. Based on the Commission Autumn 2025 forecast, 
Belgium’s net expenditure growth is projected to increase by 4.2% in 2025, which is above the 
maximum growth rate of 3.6% recommended by the Council. This corresponds to an annual 
deviation of 0.3% of GDP and a cumulative deviation of 0.3% of GDP in 2025. However, after 
taking  into  account  the  flexibility  provided  by  the  national  escape  clause,  the  projected 
cumulative deviation in 2025 is within the flexibility provided by the national escape clause. 
For 2026, net expenditure growth is projected to increase by 2.9% in 2026, which is above the 
maximum growth rate of 2.5% recommended by the Council. This corresponds to an annual 
deviation of 0.3% of GDP and a cumulative deviation of 0.5% of GDP in 2026. However, after 
taking  into  account  the  flexibility  provided  by  the  national  escape  clause,  the  projected 
cumulative deviation in 2026 is within the flexibility provided by the national escape clause. 
As a result, Belgium complies with the maximum growth of net  expenditure in the Council 
Recommendation.   

France: On 21 January 2025, the Council adopted a recommendation setting out a maximum 
net expenditure growth path with a view to bringing an end to the situation of an excessive 
deficit  in  France  by  2029.  Based  on  the  Commission  Autumn  2025  forecast,  France’s  net 
expenditure growth is projected to increase by 1.0% in 2025, which is above the maximum 
growth rate of 0.8% recommended by the Council. This corresponds to an annual deviation of 

20 

 
 
 
 
0.1%  of  GDP  in  2025.  On  a  cumulative  basis,  net  expenditure  growth  remains  within  the 
maximum  growth  rate  of  4.6%  recommended  by  the  Council.  For  2026,  net  expenditure  is 
projected to increase by 0.7%, which is within the maximum growth rate of 1.2% recommended 
by  the  Council.  On  a  cumulative  basis,  net  expenditure  growth  also  remains  within  the 
maximum  growth  rate  of  5.8%  recommended  by  the  Council.  As  a  result,  France  complies 
with the maximum growth of net expenditure in the Council Recommendation for 2026, but 
there is a risk of non-compliance in 2025.   

Hungary:  On  18  February  2025,  the  Council  adopted  a  recommendation  setting  out  a 
maximum net expenditure growth path with a view to bringing an end to the situation of an 
excessive  deficit  in  Hungary  by  2026.  Based  on  the  Commission  Autumn  2025  forecast, 
Hungary’s net expenditure growth is projected to increase by 7.6% in 2025, which is above the 
maximum growth rate of 4.3% recommended by the Council. This corresponds to an annual 
deviation of 1.3% of GDP and a cumulative deviation of 0.6% of GDP in 2025. However, after 
taking  into  account  the  flexibility  provided  by  the  national  escape  clause,  the  projected 
cumulative deviation in 2025 is within the flexibility provided by the national escape clause. 
For 2026, net expenditure growth is projected to increase by 7.4% in 2026, which is above the 
maximum growth rate of 4.0% recommended by the Council. This corresponds to an annual 
deviation of 1.3% of GDP and a cumulative deviation of  1.9% of GDP in 2026. Even after 
accounting for the flexibility provided by the national escape clause, the projected cumulative 
deviation  in  2026  is  still  0.5%  of  GDP.  As  a  result,  Hungary  complies  with the  maximum 
growth  of  net  expenditure  in  the  Council  Recommendation  for  2025  but  is  at  risk  of  non-
compliance in 2026.  

Italy: On 21 January 2025, the Council adopted a recommendation setting out a maximum net 
expenditure growth path with a view to bringing an end to the situation of an excessive deficit 
in Italy by 2026. According to the Commission Autumn 2025 Forecast, Italy’s net expenditure 
growth is projected to increase by 1.2% in 2025, which is within the maximum growth rate of 
1.3%  recommended  by  the  Council.  On  a  cumulative  basis,  net  expenditure  growth  also 
remains within the maximum growth rate of -0.7% recommended by the Council. For 2026, 
net expenditure growth is projected to increase by 1.5%, which is within the maximum growth 
rate of 1.6% recommended by the Council. On a cumulative basis, net expenditure growth also 
remains within the maximum growth rate of 0.9% recommended by the Council. As a result, 
Italy complies with the maximum net expenditure in the Council Recommendation.   

Malta: On 21 January 2025, the Council adopted a recommendation setting out a maximum 
net expenditure growth path with a view to bringing an end to the situation of an excessive 
deficit  in  Malta  by  2027.  Based  on  the  Commission  Autumn  2025  forecast,  Malta’s  net 
expenditure growth is projected to increase by 4.4% in 2025, which is within the maximum 
growth  rate  of  6.0%  recommended  by  the  Council.  However,  on  a  cumulative  basis,  net 
expenditure growth is expected to exceed the maximum growth rate of 13.8% recommended 
by the Council. This corresponds to a cumulative deviation of 2.0% of GDP in 2025. For 2026, 
net expenditure growth is projected to increase by 4.6%, which is within the maximum growth 
rate of 5.8% recommended by the Council. On a cumulative basis, net expenditure growth is 
expected to exceed the maximum growth rate of 20.4% recommended by the Council with a 
cumulative deviation of 1.5% of GDP in 2026. As a result, Malta is at risk of material non-

21 

 
 
 
 
 
 
compliance with the maximum net expenditure in the Council Recommendation in 2025 and 
2026.  

Poland: On 21 January 2025, the Council adopted a recommendation setting out a maximum 
net expenditure growth path with a view to bringing an end to the situation of an excessive 
deficit  in  Poland  by  2028.  Based  on  the  Commission  Autumn  2025  forecast,  Poland’s  net 
expenditure growth is projected to increase by 7.1% in 2025, which is above the maximum 
growth rate of 6.3% recommended by the Council. This corresponds to an annual deviation of 
0.3% of GDP and a cumulative deviation of 0.6% of GDP in 2025. However, after taking into 
account  the  flexibility  provided  by  the  national  escape  clause,  the  projected  cumulative 
deviation in 2025 is within the flexibility provided by the national escape clause. For 2026, net 
expenditure growth is projected to increase by 4.2%, which is within the maximum growth rate 
of 4.4% recommended by the Council. On a cumulative basis, the projected deviation in 2026 
is 0.5% of GDP. However, after taking into account the flexibility provided by the national 
escape clause, the projected cumulative deviation in 2026 is within the flexibility provided by 
the  national  escape  clause.  As  a  result,  Poland  complies  with the  maximum  growth  of  net 
expenditure in the Council Recommendation.  

Romania: The Council adopted a decision on 20 June 2025, in accordance with Article 126(8) 
TFEU,  establishing  that  no  effective  action  had  been  taken  by  Romania  in  response  to  the 
Council recommendation of 21 January 2025. On 8 July 2025, the Council adopted a revised 
recommendation setting out a revised maximum net expenditure growth path with a view to 
bringing  an  end  to  the  situation  of  an  excessive  deficit  in  Romania  by  2030.  Based  on  the 
Commission Autumn 2025 forecast, Romania’s net expenditure growth is projected to increase 
by  3.0%  in  2025,  which  is  above  the  maximum  growth  rate  of  2.8%  recommended  by  the 
Council. This corresponds to an annual deviation of 0.1% of GDP and a cumulative deviation 
of 0.1% of GDP in 2025. For 2026, net expenditure growth is projected to decrease by -0.3%, 
which  is  within  the  maximum  growth  rate  of  2.6%  recommended  by  the  Council.  On  a 
cumulative  basis,  net  expenditure  growth  also  remains  within  the  maximum  growth  rate  of 
5.5% recommended by the Council. As a result, Romania complies with the maximum growth 
of  net  expenditure  in  the  Council  Recommendation  for  2026,  but  there  is  a  risk  of  non-
compliance in 2025.  

Slovakia: On 21 January 2025, the Council adopted a recommendation setting out a maximum 
net expenditure growth path with a view to bringing an end to the situation of an excessive 
deficit in Slovakia by 2027. Based on the Commission Autumn 2025 forecast, Slovakia’s net 
expenditure growth is projected to increase by 2.5% in 2025, which is within the maximum 
growth  rate  of  3.8%  recommended  by  the  Council.  On  a  cumulative  basis,  net  expenditure 
growth also remains within the maximum growth rate of 10.3% recommended by the Council. 
For 2026, Slovakia’s net expenditure growth is projected to increase by 1.7%, which is above 
the maximum growth rate of 0.9% recommended by the Council. This corresponds to an annual 
deviation of 0.3% of GDP and a cumulative deviation of -1.0% of GDP in 2026. However, 
after taking into account the flexibility provided by the national escape clause, the projected 
cumulative deviation in 2026 is within the flexibility provided by the national escape clause. 
As a result, Slovakia complies with the maximum growth of net expenditure in the Council 
Recommendation.   

22 

 
 
 
 
 
 
ANNEX V: DEBT SUSTAINABILITY ANALYSIS  

This  Annex  presents  a  sensitivity  analysis  of  public  debt  developments  to  possible 
macroeconomic shocks, as required by Article 7 of Regulation (EU) No 473/2013. Stochastic 
debt  projections  are  used  to  assess  the  possible  impact  on  public  debt  dynamics  of  risks  to 
nominal  GDP  growth,  financial  market  developments  and  fiscal  shocks  affecting  the 
government budgetary position25.  

The stochastic projections account for macroeconomic uncertainty around one ‘central’ debt 
projection  scenario  in  2026-2030.  In  this  scenario,  the  usual  ‘no-fiscal  policy  change’ 
assumption is applied from the last year of the forecast horizon26. As such, this scenario does 
not  include  beyond  2026  the  fiscal  consolidation  commitments  in  the  medium-term  fiscal 
structural plans submitted by member States.  

Shocks are applied to the macroeconomic conditions assumed in the central scenario to obtain 
the distribution of possible debt paths (the ‘cone’ in the fan charts shown in Graph 9). The cone 
corresponds  to  a  wide  set  of  possible  macroeconomic  conditions,  with  up  to  10000  shocks 
simulated on growth, short- and long-term interest rates and the primary balance. The size and 
correlation  of  these  shocks  reflect  historical  volatility  and  relationships  between  these 
variables.  Therefore,  the  fan  charts  provide  probabilistic  information  on  euro  area  debt 
dynamics, taking into account the possible occurrence of shocks to growth, interest rates and 
the primary balance of a magnitude mirroring the past developments.  

The fan chart reports the projected debt path under the central scenario as a red line. The median 
outcome of the simulations is shown as a dashed black line. The cone covers 80% of all possible 
debt  paths,  while  the  paths  derived  from  the  20%  least  likely  shocks  are  not  shown.  The 
differently shaded areas within the cone represent different portions of the overall distribution 
of possible debt paths.  

The median debt for 2030 is estimated at 92.7% of GDP, i.e. there is an equal probability that 
debt will be higher or lower than that level. Moreover, the baseline points to a slight increase 
in  the debt  ratio over the next  five years  and the stochastic projections suggest  with  a  75% 
probability that debt might actually be higher in 2030 than it was in 2025. 

25   The  methodology  for  stochastic  public  debt  projections  used  here  is  presented  in  Bec  at  al.  (2025),  The 
stochastic  simulations  of  the  Commission’s  debt  sustainability  analysis:  a  refined  approach,  ECFIN 
Discussion Paper Series. 

26   The Commission Autumnn 2025 Forecast incorporates fiscal policy measures that were adopted or at least 
credibility announced and information that was available as of 31 October 2025. Beyond 2026, the structural 
primary balance is only modified by the projected (net) costs of ageing. 

23 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Graph 9. Fan charts from stochastic debt projections around the Commission’s baseline scenario; euro 
area 

Source: Commission Autumn 2025 Forecast  
Note: The dashed line represents the median while the red line represents the baseline. 

24