Article

The paper analyzes the EU's reformed fiscal framework, focusing on the use of flexibilisation clauses and their impact on public investment and green reforms. It finds that the new debt sustainability analysis framework and national escape clause for defense spending support increased public investment, unlike previous fiscal rules post-Great Recession. However, the extension clause lacks ambition in promoting the green transition, leading to three recommendations: remove counterproductive deficit safeguards, revise incentive structures for debt sustainability, and improve the DSA framework to better account for investment impacts on growth.