The European Commission positively evaluates Greece’s 2026 budget draft and medium-term fiscal plan, according to the autumn package of the European Semester released today. Presenting the budget assessment, Economics Commissioner Valdis Dombrovskis noted that out of the 20 eurozone member states, 17 submitted budget drafts for 2026 (excluding Belgium, Spain, and Austria). For the 16 member states for which the Council has activated the national escape clause, the assessment takes into account flexibility for increases in defense spending. Twelve countries: Greece, Cyprus, Estonia, Finland, France, Germany, Ireland, Italy, Latvia, Luxembourg, Portugal, Slovakia, are considered to be fully compliant with the Council’s fiscal recommendations and are called upon to implement their fiscal policies for 2026 as planned.
Budget: The Commission’s conclusions
On the other hand, the Commission judges that the budget drafts of Croatia, Lithuania and Slovenia present a risk of “non-compliance” with fiscal recommendations, while those of the Netherlands and Malta present a risk of “significant non-compliance“. These five member states are called upon to take the necessary measures to ensure that fiscal policy in 2026 complies with the Council’s recommendation.
The Commission has also assessed fiscal developments and prospects in other member states: Seven member states are assessed as compliant: Austria, Belgium, Czech Republic, Denmark, Sweden, Poland and Romania, while three member states are assessed as being at risk of non-compliance: Bulgaria, Hungary and Spain.
The Commission identifies potential macroeconomic imbalances for seven member states: Greece, Hungary, Italy, the Netherlands, Slovakia and Sweden, as well as Romania, which was assessed as a country with excessive imbalances in 2025. For these member states, it will need to be assessed whether they are affected by imbalances requiring policy action. The assessments will be carried out in the first half of 2026 and the Commission’s decisions on imbalances will be submitted within the framework of the Spring Package of the European Semester.
Nine countries under excessive deficit procedure
For the nine member states under excessive deficit procedure (Austria, Belgium, France, Hungary, Italy, Malta, Poland, Romania and Slovakia), the procedure has been suspended. Specifically, this means that no further procedural measures are taken at this stage, but the current procedure remains open and member states remain committed to reducing their deficit below the 3% of GDP threshold. The Commission will reassess the situation next spring when data for 2025 becomes available.
The Commission also prepared a report under Article 126(3) of the Treaty to assess compliance with the Treaty’s deficit criterion for Germany and Finland. The Commission considers the initiation of an excessive deficit procedure for Finland “justified“.
Post-program surveillance reports
The European Commission released post-program surveillance reports for Ireland, Greece, Spain, Cyprus and Portugal. The Commission assessed the economic, fiscal and financial situation of countries that had entered economic assistance programs, focusing on their repayment capacity. The Commission concludes that all five member states maintain their debt repayment capacity.
Recommendations for eurozone economic policy in 2026
Eurozone member states are called upon to ensure fiscal sustainability by adhering to the net spending paths recommended by the Council, including, where applicable, the flexibility provided for defense spending. This will lead to an overall neutral fiscal stance in 2026 for the eurozone. Member states are also recommended to reprioritize their budgets to cover necessary spending for strategic investments, address defense industry bottlenecks, and promote joint procurement. It is further recommended that member states complete the implementation of Recovery and Resilience Plans by August 31, 2026, ensuring full absorption of EU funds.
Additionally, the Commission recommends strengthening labor markets, promoting investments in innovation and strategic sectors, as well as enhancing the functioning of the Single Market through regulatory simplification and barrier removal.
For the first time, the Commission proposes a Council recommendation on human capital.
The new recommendation addresses all 27 member states and calls for urgent actions to address structural challenges related to human capital that can harm competitiveness.
Member states are called upon to prioritize education and skills required in strategic sectors for the EU economy, from the green transition, circular economy and industrial decarbonization, health and biotechnology, agriculture and bioeconomy, to the defense industry and space.
Finally, it is noted that the European Semester package is based on the Autumn 2025 Economic Forecasts, which show that the EU economy remains resilient with moderate growth – mainly due to strong domestic demand and investment, a stable labor market and declining inflation. At the same time, the EU faces several strategic vulnerabilities and continues to face structural challenges, such as low productivity, demographic pressures and increasing demands on public finances related to defense and the transition to a digital and carbon-free economy. Strengthening competitiveness and maintaining sound public finances will be essential to unlock Europe’s growth potential and ensure stability.
