Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Sweden
Date: 2026-06-03
Institutions: European Commission, Reform and Investment Task Force
Subjects: Sweden, budget policy, economic policy, economic recovery, economic reform, employment policy, green economy, housing policy, social policy, stability pact

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   EUROPEAN COMMISSION  Brussels, 3.6.2026  COM(2026) 227 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Sweden {SWD(2026) 227 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the economic, social, employment, structural and budgetary policies of Sweden 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121(2) and Article 148(4) thereof, 

Having regard to Regulation (EU) 2024/1263 of the European Parliament and of the Council 
of  29 April 2024  on  the  effective  coordination  of  economic  policies  and  on  multilateral 
budgetary  surveillance  and  repealing  Council  Regulation  (EC)  No  1466/97  (1),  and  in 
particular Article 3(3) thereof, 

Having  regard  to  Regulation  (EU)  No  1176/2011  of  the  European  Parliament  and  of  the 
Council  of  16 November 2011  on  the  prevention  and  correction  of  macroeconomic 
imbalances (2), and in particular Article 6(1) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

1 

2 

Regulation  (EU)  2024/1263  specifies  the  objectives  of  the  economic  governance 
framework,  which  aims  at  promoting  sound  and  sustainable  public  finances, 
sustainable  and  inclusive  growth  and  resilience  through  reforms  and  investments,  as 
well  as  preventing  excessive  government  deficits.  The  Regulation  stipulates  that  the 
Council  and  the  Commission  conduct  multilateral  surveillance  in  the  context  of  the 
European Semester in accordance with the objectives and requirements set out in the 
Treaty  on  the  Functioning  of  the  European  Union  (TFEU).  The  European  Semester 
includes, in  particular, the formulation and the surveillance of the implementation  of 
country-specific recommendations. 

Regulation 

Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  of  29 April 2024  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary  surveillance  and  repealing 
Council 
ELI: 
http://data.europa.eu/eli/reg/2024/1263/oj). 
Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 
on  the  prevention  and  correction  of  macroeconomic  imbalances  (OJ  L  306,  23.11.2011  ELI: 
http://data.europa.eu/eli/reg/2011/1176/oj). 

(EC)  No 

2024/1263, 

30.4.2024, 

1466/97 

(OJ 

L, 

EN 

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(2) 

(3) 

(4) 

(5) 

3 

4 
5 

6 

On  16 July 2025,  the  Commission  adopted  its  proposal  for  a  regulation  establishing 
the European Fund for economic, social and territorial cohesion, agriculture and rural, 
fisheries and maritime, prosperity and security for the period 2028-2034 and amending 
Regulation (EU) 2023/955 and Regulation (EU, Euratom) 2024/2509 (3). The proposal 
aims to increase the effectiveness of Union funding by reducing the fragmentation of 
the  financial  architecture  and  to  support  Member  States’  in  the  coordination  of  their 
economic policy in line with Article 175 TFEU. 

On  25 November 2025,  on  the  basis  of  Regulation  (EU)  No  1176/2011,  the 
Commission  adopted  the  2026  Alert  Mechanism  Report,  in  which  it  identified 
Sweden as one of the Member States for which an in-depth review would be needed. 
The  Commission  also  adopted  a  recommendation  for  a  Council  recommendation  on 
the  economic  policy  of  the  euro  area  (4),  a  recommendation  for  a  Council 
recommendation on human capital in the European Union, and a proposal for the 2026 
Joint  Employment  Report,  which  analyses  the  implementation  of  the  Employment 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights.  The  Council 
adopted  the  Recommendation  on  the  economic  policy  of  the  euro area (5)  on 
21 April 2026, and the Joint Employment Report, and the Recommendation on human 
capital on 9 March 2026. 

On  29 January 2025,  the  Commission  published  the  Competitiveness  Compass,  a 
strategic  framework  that  aims  to  boost  the  Union’s  global  competitiveness  over  the 
next  five  years.  It  identifies  the  three  transformational  imperatives  of  innovation, 
decarbonisation  and  competitiveness,  and  security  as  critical  pillars  for  sustainable 
economic  growth.  The  European  Semester  is  aligned  with  the  Competitiveness 
Compass,  ensuring  that  Member  States’  economic  policies  are  consistent  with  the 
Commission’s  strategic  objectives,  creating  a  unified  approach 
to  economic 
governance that fosters sustainable growth, innovation and resilience across the Union. 

In  2026,  the  European  Semester  for  economic  policy  coordination  continues  to 
develop  alongside  the  final  stage  of  Recovery  and  Resilience  Facility  (RRF) 
implementation (6). Recovery and resilience plans (RRPs), along with cohesion policy 
funding, have been essential for delivering on the policy priorities under the European 
Semester, as the plans were required to effectively address all or a significant subset of 
challenges identified in the relevant country-specific recommendations issued in recent 
cycles, and programmes funded by the European cohesion policy were required to take 
country-specific recommendations into account. As the RRF approaches the end of its 
lifetime,  it  remains  essential  to  sustain  the  reforms  and  investments  supported  and 
implemented  under  RRF,  in  particular  those  that  contribute  to  addressing  challenges 
identified in the country-specific recommendations. 

Proposal for a Regulation of the European Parliament and of the Council establishing the European Fund for 
economic,  social  and  territorial  cohesion,  agriculture  and  rural,  fisheries  and  maritime,  prosperity  and 
security for the period 2028-2034 and amending Regulation (EU) 2023/955 and Regulation (EU, Euratom) 
2024/2509 - COM(2025)565 final. The proposed Regulation is currently the subject of negotiations with the 
co-legislators. 
OJ C, C/2026/2434, 28 April 2026, ELI: http://data.europa.eu/eli/C/2026/2434/oj. 
Council  Recommendation  of  21 April 2026  on  the  economic  policy  of  the  euro  area  (OJ  C, 
C/2026/2434, 28 April 2026, ELI: http://data.europa.eu/eli/C/2026/2434/oj. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12 February 2021 
establishing  the  Recovery  and  Resilience  Facility  (OJ  L  57,  18 February 2021,  p.  17,  ELI: 
http://data.europa.eu/eli/reg/2021/241/oj). 

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(6) 

(7) 

(8) 

in 

addressing 

On  3 June 2026,  the  Commission  published  the  2026  country  report  for  Sweden.  It 
country-specific 
assessed  Sweden’s  progress 
recommendations  and  took  stock  of  Sweden’s  implementation  of  the  RRP.  On  the 
basis  of  that  analysis,  the  country  report  identified  the  most  pressing  challenges 
Sweden  is  facing.  It  also  assessed  Sweden’s  progress  in  implementing  the  European 
Pillar  of  Social  Rights  and  in  achieving  the  Union  headline  targets  on  employment, 
skills  and  poverty  reduction,  as  well  as  progress  in  achieving  the  United  Nations 
Sustainable Development Goals.  

relevant 

the 

The  Commission  carried  out  an  in-depth  review  under  Article  5  of  Regulation  (EU) 
No 1176/2011 for Sweden. The main findings of the Commission’s staff assessment of 
macroeconomic  vulnerabilities  for  Sweden  for  the  purposes  of  that  Regulation  were 
published  on  20 May 2026  (7).  On  3 June 2026,  the  Commission  concluded  that 
Sweden  is  no  longer  experiencing  macroeconomic  imbalances.  In  particular, 
vulnerabilities related to its real estate market and high levels of private debt remain 
but their gravity has lessened recently. While the Swedish economy is highly sensitive 
to  interest  rates  due  to  the  widespread  use  of  variable-rate  mortgages,  it  proved 
resilient  to  the  higher  interest  rates  in  2022  and  2023,  which  caused  house  prices  to 
drop. Since then, house prices have been stable and seem less overvalued than before. 
The large commercial real estate sector showed signs of improved refinancing capacity 
as interest rates eased and capital market access improved. Household debt as a share 
of  GDP,  which  had  been  falling  since  the  pandemic,  levelled  off  in  2025  and  is 
expected  to  stay  steady.  Going  forward,  housing  shortages,  coupled  with  looser 
borrower requirements, could push house prices and household debt up. Banks remain 
strong, profitable, and with low non-performing loans. Some measures have recently 
been  taken  aimed  at  making  the  rental  market  more  flexible,  and  the  regulatory 
framework for building permits was tweaked in late 2025. Looking ahead, effectively 
increasing  housing  supply  and  tackling  tax  incentives  favouring  debt-financed  house 
buying,  together with  judicious use of macroprudential  measures, would help  further 
dampen house price growth and reduce household debt in a lasting way. The European 
Semester will provide the framework for monitoring progress on housing reforms. 

On  21 January 2025,  the  Council,  upon  the  assessment  and  recommendation  of  the 
Commission, adopted a Recommendation endorsing the national medium-term fiscal-
structural  plan  of  Sweden  (8).  The  plan  covers  the  period  from  2025  until  2028  and 
sets a budgetary constraint in the form of a maximum net expenditure growth rate over 
four  years.  The  Council  recommended  the  following  maximum  growth  rates  of  net 
expenditure:  4.0%  in  2025,  4.4%  in  2026,  4.4%  in  2027  and  4.6%  in  2028,  which 
correspond  to  the  maximum  cumulative  growth  rates  calculated  by  reference  to  the 
base  year  of  2023  of  10.7%  in  2025,  15.5%  in  2026,  20.6%  in  2027  and  26.1%  in 
2028. 

(9) 

Russia’s  war  of  aggression  against  Ukraine  and  its  repercussions  constitute  an 
existential  challenge  for  the  European  Union.  The  Commission  has  invited  Member 
States  to  request  the  activation  of  the  national  escape  clause  of  the  Stability  and 
Growth Pact in a coordinated manner to support the EU efforts to achieve a rapid and 

7 
8 

SWD(2026) 143 final. 
Council Recommendation of 21 January 2025 endorsing the national medium-term fiscal-structural plan 
of Sweden (OJ C, C/2025/644, 10 February 2025), ELI: http://data.europa.eu/eli/C/2025/644/oj). 

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significant  increase  in  defence  spending  (9)  and  this  proposal  was  welcomed  by  the 
European Council of 6 March 2025. Member States may still request the activation of 
the national escape clause at any time until 2028, if they fulfil the criteria set in Article 
26 of Regulation (EU) 2024/1263. 

(10)  On  30 April 2026,  Sweden  submitted  its  2026  Annual  Progress  Report  (10)  on 
adherence  to  the  recommended  maximum  growth  rates  of  net  expenditure  and  the 
implementation  of  reforms  and  investments  responding  to  the  main  challenges 
identified  in  the  European  Semester  country-specific  recommendations.  The  Annual 
Progress  Report  also  reflects  Sweden’s  biannual  reporting  on  the  progress  made  in 
implementing 
accordance  with 
Article 27 of Regulation (EU) 2021/241. 

resilience 

recovery 

plan 

and 

its 

in 

(11)  Real  GDP  growth  in  2025  was  1.5%  and  HICP  inflation  stood  at  2.6%.  The 
Commission  Spring  2026  Forecast  projects  real  GDP  to  grow  by  1.8%  in  2026  and 
2.2% in 2027, and HICP inflation to stand at 1.5% in 2026 and 1.8% in 2027. 
(12)  Based  on  data  provided  by  Eurostat  (11),  Sweden’s  general  government  deficit 
decreased  from  1.5%  of  GDP  in  2024  to  1.3%  of  GDP  in  2025.  Based  on  policy 
measures  known  by  the  cut-off  date  of  the  forecast,  the  Commission  Spring  2026 
Forecast  projects  a  deficit  of  2.8%  of  GDP  in  2026  and  2.5%  of  GDP  in  2027.  The 
increase  in  2026  mainly  reflects  relatively  significant  discretionary  fiscal  spending, 
especially in the area of defence. 

(13)  Based  on  the  Commission’s  estimates,  the  fiscal  stance  (12),  which  includes  both 
nationally  and  EU  financed  expenditure,  was  contractionary,  by  0.3%  of  GDP,  in 
2025. It is projected to be expansionary, by 1.9% of GDP, in 2026, and contractionary, 
by 0.6% of GDP, in 2027. 

(14)  Based on data provided by Eurostat (13), Sweden’s general government debt increased 
from 34.2% of GDP at the end of 2024 to 35.1% of GDP at the end of 2025. Based on 
policy  measures  known  at  the  cut-off  date  of  the  forecast,  the  Commission  Spring 
2026 Forecast projects the debt-to-GDP ratio to increase to 36.6% by the end of 2026 
and to further increase to 37.7% by the end of 2027. The debt ratio increase in 2026 
mainly reflects the increase in the deficit. 

(15)  Based on Eurostat data (14), total general government defence expenditure in Sweden 
amounted  to  2.9%  of  GDP  in  2025.  According  to  the  Commission  Spring  2026 
Forecast, it is projected at 3.8% of GDP in 2026.  

(16)  The  Union  continues  to  face  risks  of  energy  supply  disruptions  and  elevated  price 
volatility,  exacerbated  by  geopolitical  tensions  which  affect  global  oil  and  gas 

9 

10 

11 
12 

13 
14 

Communication  from  the  Commission,  'Accommodating  increased  defence  expenditure  within  the 
Stability and Growth Pact’, Brussels, 19 March 2025, C(2025)2000 final. 
The  2026  Annual  Progress  Reports  are  available  on:  https://economy-finance.ec.europa.eu/economic-
and-fiscal-governance/stability-and-growth-pact/preventive-arm/annual-progress-reports_en. 
Eurostat-Euro Indicators, 22 April 2026. 
The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of 
the  general  government.  It  aims  to  assess  the  economic  impulse  stemming  from  fiscal  policies,  both 
those  that  are  nationally  financed  and  those  that  are  financed  by  the  EU  budget.  The  fiscal  stance  is 
measured as the difference between (i) the medium-term potential growth and (ii) the change in primary 
expenditure net of discretionary revenue measures and including expenditure financed by non-repayable 
support (grants) from the Recovery and Resilience Facility and other Union funds. 
Eurostat-Euro Indicators, 22 April 2026. 
Eurostat, government expenditure by classification of functions of government (COFOG). 

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markets.  Experience  from  the  2022–2023  energy  crisis  has  shown  that  broad  and 
untargeted  measures  entail  large  fiscal  costs  and  are  socially  and  economically 
inefficient. Since the outbreak of the war in the Middle East in February 2026, Sweden 
adopted  fiscal  policy  measures  to  mitigate  the  impact  of  high  energy  prices  on 
households and firms.  These include untargeted  reductions in  excise duties  on petrol 
and  diesel  set  to  expire  on  30 September  and  30 November 2026,  respectively,  and 
untargeted  ex-post  cash  support  to  households  for  gas  and  electricity  costs  incurred 
during  January  and  February  2026.  According  to  the  Commission  Spring  2026 
Forecast, the fiscal cost of these measures is projected to amount to 0.2% of GDP in 
2026  (15).  According  to  Commission  estimates,  if  these  measures  were  to  remain  in 
force until end-2026, their fiscal cost would amount to 0.4% of GDP in 2026. 

(17)  Based on the Commission’s calculations, net expenditure in Sweden grew by 2.2% in 
2025 and 8.2% cumulatively over 2024 and 2025. The net expenditure growth in 2025 
is below the recommended maximum growth rate. When considering 2024 and 2025 
together,  the  cumulative  growth  rate  of  net  expenditure  is  also  below  the 
recommended maximum growth rate. 

(18)  Based  on  the  Commission’s  calculations,  net  expenditure  in  Sweden  is  projected  to 
grow  by  6.5%  in  2026,  and  15.3%  cumulatively  over  2024,  2025  and  2026.  The 
projected  net  expenditure  growth  in  2026  is  above  the  recommended  maximum 
growth  rate,  corresponding  to  a  deviation  of  1.0%  of  GDP  in  annual  terms.  When 
considering 2024, 2025 and 2026 together, the projected cumulative growth rate of net 
expenditure  is  below  the  recommended  maximum  growth  rate.  The  systematic, 
meaningful  and timely involvement  of local  and regional  authorities, social partners, 
civil society and other relevant stakeholders remains essential in order to ensure broad 
ownership  for  the  successful  implementation  of  the  Union’s  funding  instruments,  as 
well as in the context of the European Semester. 

(19)  The implementation  of cohesion  policy programmes,  which encompass support from 
the  European  Regional  Development  Fund  (ERDF),  the  Just  Transition  Fund  (JTF) 
and  the  European  Social  Fund  Plus  (ESF+)  in  Sweden,  is  above  the  average  pace  at 
EU  level,  both  in  terms  of  project  selection  and  payments.  It  is  important  to  keep 
current  momentum,  while  maximising  the  impact  of  investments  on  the  ground. 
Sweden  is  already  taking  action  under  its  cohesion  policy  programmes  to  boost 
competitiveness and growth. Nevertheless, some areas may require further attention in 
implementation,  such  as  sustainable  urban  development  and  circular  economy.  It  is 
essential  to  ensure  that  the  new  investments  identified  by  Sweden  in  its  mid-term 
review  of  the  cohesion  policy  funds,  notably  those  linked  to  the  five  priorities 
identified  in  the  Mid-Term  Review  Regulation  (16),  are  deployed  rapidly  and 
effectively. 

(20)  Sweden  faces  several  challenges  related  to  the  housing  market  and  high  debt  levels, 
the  reduction  of  greenhouse  gas  emissions,  the  deployment  of  renewables  linked  to 
power  grid  capacity  and  transmission  constraints,  the  education  system  and  the 
deteriorating  educational  outcomes  of  pupils,  and  skills  gaps,  which  are  most 
pronounced for people from disadvantaged socio-economic and migrant backgrounds. 

15 
16 

This reflects the situation at the cut-off date of the Commission Spring 2026 Forecast (4 May 2026). 
Regulation  (EU)  2025/1914  of  the  European  Parliament  and  of  the  Council  of  18 September 2025 
amending  Regulations  (EU)  2021/1058  and  (EU)  2021/1056  as  regards  specific  measures  to  address 
strategic challenges in the context of the mid-term review. 

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(21)  Rental  controls  in  Sweden  are  the  strictest  in  the  OECD  with  the  market  divided 
between regulated apartments with below-market rents and newer units with market-
aligned rents. This structure generates long waiting lists for regulated apartments with 
limited distribution mechanisms for those most in need, hampers housing construction, 
and  restricts  labour  mobility.  Building-permit  data  confirm  the  severity  of  the 
construction downturn and point to a stabilisation at low levels. A significant increase 
in construction, particularly in urban areas, would be needed to prevent a widening of 
the  housing  supply  gap,  along  with  efforts  to  reduce  average  zoning  and  permitting 
lead times that build on and extend recent efforts in that area. Private debt levels are 
amongst  the  highest  in  the  EU.  The  favourable  taxation  of  mortgages,  in  particular 
significant mortgage interest deductibility, continues offering extensive incentives for 
household borrowing. Effective reforms could reduce incentives for debt accumulation 
and improve affordability. 

(22)  With its current policies, Sweden is not on track to meet its 2030 EU targets to reduce 
greenhouse gas emissions. The country’s greenhouse gas emissions increased in 2024, 
chiefly from road transport and non-road mobile machinery. In particular, this shortfall 
reflects  recent  policy  changes,  including  lower  biofuel  blending  obligations  and 
reduced  taxes  on  liquid  fuels,  which  have  led  to  an  increase  in  greenhouse  gas 
emissions. Moreover, Sweden’s carbon removals continue to fall short of meeting the 
2030 EU target for land use, land use change and forestry. Further policy action would 
be  needed  to  reach  these  targets,  including  via  fuels  taxation  and  incentives  for 
sustainable forest management. 

(23)  Sweden continues to be the Member State with the highest share of renewables in its 
final  energy  consumption.  However,  constraints  in  power  grid  capacity  and 
transmission  hinder  the  further  deployment  of  renewable  energy  sources.  Removing 
these  constraints  is  pivotal,  as  Sweden’s  final  electricity  consumption  is  expected  to 
rise significantly in the period to 2045, driven by the increased electrification needs of 
industry  and  transport.  Improving  access  to  Sweden’s  untapped  potential  for 
renewables could accommodate the ongoing electrification of industries in the south of 
the  country  and  support  the  innovative  and  green  industrial  development  and 
decarbonisation in the north. 

(24)  The current permitting procedures hamper new large-scale clean industry projects and 
the  expansion  of  Sweden’s  renewable  energy  production  capacity.  Drawn-out  and 
complex procedures create, among other things, investment uncertainty and hinder the 
uptake  of  offshore  and  onshore  wind  energy  projects.  Sweden  would  benefit  from 
extending and building on  the recently decided targeted local  compensation schemes 
and  from  further  reducing  barriers  emanating  from  inefficient  permitting  procedures 
and veto rights of municipalities. 

(25) 

In light of the crucial role of human capital in enhancing the Union’s competitiveness 
and  strategic  autonomy,  in  2026  the  Council  recommended  that  Member  States  take 
action  to  urgently  address  human  capital  related  structural  challenges  in  the  areas  of 
skills  and  education,  which  hamper  competitiveness.  The  2026  country-specific 
recommendations  addressed  to  Sweden  can  contribute  to  the  implementation  of  the 
Council Recommendation on human capital in the Union. 

(26)  While  Swedish  students  perform  above  the  EU  average  in  basic  and  digital  skills, 
education outcomes in basic skills have declined since 2018. The school system does 
not ensure equity, which is manifested by the underachievement in basic skills being 
especially  high  for  students  with  a  migrant  or  disadvantaged  socio-economic 

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background, who also are more likely to be concentrated in certain schools. Students 
from  disadvantaged  backgrounds  are  also  underrepresented  in  privately  operated 
schools, which on average are more generous in their grading and whose pupils thus 
are  given  greater  chances  of  qualifying  for  further  studies.  A  significant  share  of 
students  finish  compulsory  school  with  grades  that  are  too  low  or  incomplete, 
excluding  them  from  qualifying  for  upper  secondary  school  and  subsequently  for 
continued  and  higher  education.  The  persistent  shortage  of  qualified  teachers, 
especially  in  schools  and  early  childhood  education  and  care  with  a  high  number  of 
disadvantaged students, poses a risk to the quality and equity of the education system 
and further aggravates the declining education outcomes. Sweden would benefit from 
building  on  recent  reform  proposals  that  aim  to  address  the  underlying  causes  of 
adverse trends in equity and performance. 

(27)  Despite  efforts,  labour  and  skills  shortages  continue  to  persist  in  certain  sectors  and 
occupations,  such  as  the  healthcare,  IT  and  education  professions,  and  are  further 
exacerbated  by  mismatches  between  education  and  training,  and  labour  market 
demands.  This  has  a  negative  impact  on  Sweden’s  competitiveness  and  leads  to 
structural  unemployment.  There  are  several  regions,  such  as  in  the  northern  sparsely 
populated  areas  with  labour  shortages,  while  labour  is  in  surplus  in  other  regions, 
which  shows  the  need  for  improving  labour  mobility  and  improving  public  services 
and  infrastructure  to  enable  workers  to  relocate  to  regions  where  the  available  job 
opportunities better match their skills. Despite the growing participation in vocational 
education and training (VET), it continues to face challenges in adapting to the labour 
market  needs  and  the  percentage  of  graduates  working  in  jobs  that  match  their 
education and training has been declining. The impact of the measures taken to ensure 
the  faster  integration  of  people  from  vulnerable  groups,  particularly  the  individuals 
from disadvantaged and migrant backgrounds, into the labour market, has so far been 
limited and Sweden continues to have the highest  EU unemployment rate for people 
born  outside  the  EU.  The  lower  educational  attainment  and  limited  skills  of 
individuals from vulnerable groups further reduces their employability.  

HEREBY RECOMMENDS that Sweden take action in 2026 and 2027 to:  

1. 

2. 

3. 

In view of the material deviation projected for 2026 by the Commission vis-à-vis the 
recommended  net  expenditure  ceiling,  ensure  that  net  expenditure  respects  the 
maximum growth rates recommended by the Council on 21 January 2025. Reinforce 
defence  readiness  while  ensuring  spending  efficiency  and  gradually  adapting  the 
budget  to  sustain  structurally  higher  defence  spending.  Ensure  that  any  measures 
taken to  mitigate the impact  of the hike in  energy prices are temporary, targeted  at 
protecting  vulnerable  households  or  at  addressing  the  needs  of  energy-intensive 
firms, preserve incentives for energy savings  while ensuring that their fiscal cost is 
compatible with the commitments under the EU fiscal framework. 

Ensure continuity of reforms and investments implemented under the Recovery and 
Resilience  Facility.  Sustain  implementation  momentum  under  cohesion  policy 
programmes building, where appropriate, on the reallocation to strategic priorities in 
the mid-term review and the flexibilities provided in the cohesion policy framework. 

Improve  the  efficiency  of  the  housing  market,  including  by  introducing  reforms  in 
the  rental  market.  Stimulate  investment  in  residential  construction  and  remove 
structural obstacles to ease shortages, particularly in urban areas.  Reduce incentives 
for debt accumulation, including by  eliminating or reducing the tax deductibility of 
mortgage interest. 

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4. 

5. 

Ensure the achievement of greenhouse gas emissions reduction and removal targets 
by  reducing,  in  particular,  emissions  from  road  transport.  Expand  and  upgrade 
energy  transmission  networks.  Accelerate  and  streamline  permitting  procedures  for 
deploying renewables, particularly for offshore and onshore wind energy, and avoid 
permitting approval reversals. 

Improve  educational  outcomes,  particularly  of  students  from  disadvantaged 
socioeconomic and migrant backgrounds, address the shortage of qualified teachers, 
ensure  equity  in  the  schooling  system.  Develop  the  skills  of  the  labour  force  and 
address skills shortages and mismatches through targeted active labour market policy 
measures, and through support and incentives to improve the integration particularly 
of individuals from disadvantaged socioeconomic and migrant backgrounds into the 
labour market. 

Done at Brussels, 

For the Council 
The President 

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