Henstilling med henblik på RÅDETS HENSTILLING om Maltas økonomiske, sociale, beskæftigelsesmæssige, strukturelle og budgetmæssige politikker

EN EN
EUROPEAN
COMMISSION
Brussels, 4.6.2025
COM(2025) 218 final
Recommendation for a
COUNCIL RECOMMENDATION
on the economic, social, employment, structural and budgetary policies of Malta
{SWD(2025) 218 final}
Offentligt
KOM (2025) 0218 - Henstilling
Europaudvalget 2025
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Recommendation for a
COUNCIL RECOMMENDATION
on the economic, social, employment, structural and budgetary policies of Malta
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 1466/971
, and in particular
Article 3(3) 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:
General considerations
(1) Regulation (EU) 2024/1263, which entered into force on 30 April 2024, specifies the
objectives of the economic governance framework, which aims at promoting sound
and sustainable public finances and sustainable and inclusive growth and resilience
through reforms and investments, and 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 TFEU. The European Semester includes, in particular,
the formulation, and the surveillance of the implementation of country-specific
recommendations. The Regulation also promotes national ownership of fiscal policy
and emphasises its medium-term focus, combined with more effective and coherent
enforcement. Each Member State must submit to the Council and the Commission a
national medium-term fiscal-structural plan, containing its fiscal, reform and
investment commitments, over 4 or 5 years, depending on the length of the national
legislative term. The net expenditure2
path in these plans has to comply with the
1
OJ L, 2024/1263, 30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1263/oj.
2
Net expenditure as defined in Article 2, point (2), of Regulation (EU) 2024/1263: ‘net expenditure’
means government expenditure net of (i) interest expenditure; (ii) discretionary revenue measures; (iii)
expenditure on programmes of the Union fully matched by revenue from Union funds; (iv) national expenditure
on co-financing of programmes funded by the Union; (v) cyclical elements of unemployment benefit
expenditure; and (vi) one-offs and other temporary measures.
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Regulation’s requirements, including the requirements to put or keep general
government debt on a plausibly downward path by the end of the adjustment period, or
for it to remain at prudent levels below 60% of gross domestic product (GDP), and to
bring and/or maintain the general government deficit below the 3%-of-GDP Treaty
reference value over the medium term. Where a Member State commits to a relevant
set of reforms and investments in accordance with the criteria set out in the
Regulation, the adjustment period may be extended by up to three years.
(2) Regulation (EU) 2021/241 of the European Parliament and of the Council3
, which
established the Recovery and Resilience Facility (the ‘RRF’), entered into force on
19 February 2021. The RRF provides financial support to Member States for
implementing reforms and investments, delivering a fiscal impulse financed by the
Union. In line with the priorities of the European Semester for economic policy
coordination, the RRF fosters economic and social recovery while driving sustainable
reforms and investments, in particular promoting the green and digital transitions and
making Member States’ economies more resilient. It also helps strengthen public
finances and boost growth and job creation in the medium and long term, improve
territorial cohesion within the Union and support the continued implementation of the
European Pillar of Social Rights.
(3) Regulation (EU) 2023/435 of the European Parliament and of the Council4
(the
‘REPowerEU Regulation’), which was adopted on 27 February 2023, aims to phase
out the Union’s dependence on Russian fossil-fuel imports. This helps achieve energy
security and diversify the Union’s energy supply, while increasing the uptake of
renewables, energy storage capacities and energy efficiency. Malta added a new
REPowerEU chapter to its national recovery and resilience plan in order to finance key
reforms and investments that will help achieve the REPowerEU objectives.
(4) On 13 July 2021, Malta submitted its national recovery and resilience plan to the
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant
to Article 19 of that Regulation, the Commission assessed the relevance, effectiveness,
efficiency and coherence of the recovery and resilience plan, in accordance with the
assessment guidelines set out in Annex V. On 5 October 2021, the Council adopted its
Implementing Decision approving the assessment of the recovery and resilience plan
for Malta5
, which was amended under Article 18(2) on 14 July 2023 to update the
maximum financial contribution for non-repayable financial support, as well as to
include the REPowerEU chapter6
. The release of instalments is conditional on the
adoption of a decision by the Commission, in accordance with Article 24(5), stating
that Malta has satisfactorily achieved the relevant milestones and targets set out in the
Council Implementing Decision. Satisfactory achievement requires that the
3
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, 18.2.2021, p. 17, ELI:
http://data.europa.eu/eli/reg/2021/241/oj).
4
Regulation (EU) 2023/435 of the European Parliament and of the Council of 27 February 2023
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans and
amending Regulations (EU) No 1303/2013, (EU) 2021/1060 and (EU) 2021/1755, and Directive 2003/87/EC
(OJ L 63, 28.2.2023, p. 1, ELI: http://data.europa. eu/eli/reg/2023/435/oj).
5
Council Implementing Decision of 5 October 2021 on the approval of the assessment of the recovery
and resilience plan for Malta (ST 11941/2021 INIT; ST 11941/2021 ADD 1).
6
Council Implementing Decision of 14 July 2023 amending the Implementing Decision of 5 October
2021 on the approval of the assessment of the recovery and resilience plan for Malta (ST 11202/2023 INIT, ST
11202/2023 ADD 1).
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achievement of preceding milestones and targets for the same reform or investment
has not been reversed.
(5) On 21 January 2025, the Council, upon the recommendation of the Commission,
adopted a recommendation endorsing the national medium-term fiscal-structural plan
of Malta7
. The plan was submitted in accordance with Article 11 and Article 36(1),
point (a), of Regulation (EU) 2024/1263, covers the period from 2025 until 2028 and
presents a fiscal adjustment spread over four years.
(6) On 26 November 2024, the Commission adopted an opinion on the 2025 draft
budgetary plan of Malta. On the same date, on the basis of Regulation (EU) No
1176/2011, the Commission adopted the 2025 Alert Mechanism Report, in which it
did not identify Malta 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 and a proposal for the 2025
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 area8
on 13 May
2025 and the Joint Employment Report on 10 March 2025.
(7) On 29 January 2025, the Commission published the Competitiveness Compass, a
strategic framework that aims to boost the EU’s global competitiveness over the next
five years. It identifies the three transformative imperatives of sustainable economic
growth: (i) innovation; (ii) decarbonisation and competitiveness; and (iii) security. To
close the innovation gap, the EU aims to foster industrial innovation, support the
growth of start-ups through initiatives like the EU Start-up and Scale-up Strategy, and
promote the adoption of advanced technologies like artificial intelligence and quantum
computing. In pursuit of a greener economy, the Commission has outlined a
comprehensive Affordable Energy Action Plan and a Clean Industrial Deal, ensuring
that the shift to clean energy remains cost-effective, competitiveness-friendly,
particularly for energy-intensive sectors, and is a driver for growth. To reduce
excessive dependencies and increase security, the Union is committed to strengthening
global trade partnerships, diversifying supply chains and securing access to critical
raw materials and clean energy sources. These priorities are underpinned by horizontal
enablers, namely regulatory simplification, deepening of the single market, financing
competitiveness and a Savings and Investments Union, promotion of skills and quality
jobs, and better coordination of EU policies. The Competitiveness Compass is aligned
with the European Semester, 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.
(8) In 2025, the European Semester for economic policy coordination continues to
develop alongside the implementation of the RRF. The full implementation of the
recovery and resilience plans remains essential for delivering on the policy priorities
under the European Semester, as the plans help effectively address all or a significant
subset of challenges identified in the relevant country-specific recommendations
7
Council Recommendation of 21 January 2025 endorsing the medium-term fiscal-structural plan of
Malta, OJ C/2025/649, 10.2.2025.
8
Council Recommendation of 13 May 2025 on the economic policy of the euro area (OJ C,
C/2025/2782, 22.5.2025, ELI: http://data.europa.eu/eli/C/2025/2782/oj).
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issued in recent years. These country-specific recommendations remain equally
relevant for the assessment of amended recovery and resilience plans in accordance
with Article 21 of Regulation (EU) 2021/241.
(9) The 2025 country-specific recommendations cover the key economic policy
challenges that are not sufficiently addressed by measures included in the recovery and
resilience plans, taking into account the relevant challenges identified in the 2019-
2024 country-specific recommendations.
(10) On 4 June 2025, the Commission published the 2025 country report for Malta. It
assessed Malta’s progress in addressing the relevant country-specific
recommendations and took stock of Malta’s implementation of the recovery and
resilience plan. Based on this analysis, the country report identified the most pressing
challenges Malta is facing. It also assessed Malta’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.
Assessment of the Annual Progress Report
(11) On 21 January 2025 the Council recommended the following maximum growth rates
of net expenditure for Malta: 6.0% in 2025, 5.8% in 2026, 5.8% in 2027, and 6.1% in
2028, which correspond to the maximum cumulative growth rates calculated by
reference to 2023 of 13.8% in 2025, 20.4% in 2026, 27.4% in 2027, and 35.1% in
2028. In 2025-2028, these maximum growth rates of net expenditure coincide with the
corrective path in accordance with Article 3(4) of Regulation 1467/97, as
recommended by the Council on 21 January 2025 with a view to bringing an end to
the situation of an excessive deficit9
. On 30 April 2025 Malta submitted its Annual
Progress Report10
, on action taken in response to the Council recommendation of 21
January 2025 with a view to bringing an end to the situation of an excessive deficit
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 Malta’s biannual reporting on the progress made in
achieving its recovery and resilience plan in accordance with Article 27 of Regulation
(EU) 2021/241.
(12) Russia’s war of aggression against Ukraine and its repercussions constitute an
existential challenge for the European Union. The Commission recommended to
activate the national escape clause of the Stability and Growth Pact in a coordinated
manner to support the EU efforts to achieve a rapid and significant increase in defence
spending and this proposal was welcomed by the European Council of 6 March 2025.
(13) Based on data validated by Eurostat11
, Malta’s general government deficit decreased
from 4.7% of GDP in 2023 to 3.7% in 2024, while the general government debt fell
from 47.9% of GDP at the end of 2023 to 47.4% at the end of 2024. According to the
Commission’s calculations, these developments correspond to a net expenditure
growth rate of 13.9% in 2024. In the 2025 Annual Progress Report, Malta estimates
the net expenditure growth in 2024 at 14.3%. Based on the Commission’s estimates,
9
Council Recommendation with a view to bringing an end to the situation of an excessive deficit in
Malta, C/2025/5036.
10
The 2025 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
11
Eurostat-Euro Indicators, 22.4.2025.
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the fiscal stance12
, which includes both nationally and EU financed expenditure, was
expansionary, by 1.2% of GDP, in 2024.
(14) According to the Annual Progress Report, the macroeconomic scenario underpinning
the budgetary projections by Malta expects real GDP growth at 4.0% in 2025, while
HICP inflation is projected at 2.3% in 2025. The Commission Spring 2025 Forecast
projects real GDP to grow by 4.1% in 2025 and 4.0% in 2026, and HICP inflation to
stand at 2.2% in 2025 and 2.1% in 2026.
(15) In the Annual Progress Report, the general government deficit is expected to decrease
to 3.3% of GDP in 2025, while the general government debt-to-GDP ratio is set to
increase to 48.4% by the end of 2025. These developments correspond to net
expenditure growth of -0.1% in 2025. The Commission Spring 2025 Forecast projects
a general government deficit of 3.2% of GDP in 2025. The decrease of the deficit in
2025 mainly reflects a decrease in other capital expenditures due to the expiry of costs
related to the national airline. According to the Commission’s calculations, these
developments correspond to net expenditure growth of 0.8% in 2025. These higher
projections of net expenditure growth than in the Annual Progress Report are due to
different projections for the national co-financing of EU programmes and other capital
expenditure. Based on the Commission’s estimates, the fiscal stance, which includes
both nationally and EU financed expenditure, is projected to be contractionary, by
1.9% of GDP, in 2025. The general government debt-to-GDP ratio is set to increase to
47.6% by the end of 2025.
(16) General government expenditure amounting to 0.2% of GDP is expected to be
financed by non-repayable support (“grants”) from the Recovery and Resilience
Facility in 2025, compared to 0.3% of GDP in 2024, according to the Commission
Spring 2025 Forecast. Expenditure financed by Recovery and Resilience Facility non-
repayable support enables high-quality investment and productivity-enhancing reforms
without a direct impact on the general government balance and debt of Malta.
(17) General government defence expenditure in Malta amounted to 0.5% of GDP in 2021,
0.5% of GDP in 2022 and 0.4% of GDP in 202313
. According to the Commission
Spring 2025 Forecast, expenditure on defence is projected at 0.4% of GDP in both
2024 and 2025. This corresponds to a decrease of 0.1 percentage points of GDP
compared to 2021.
(18) According to the Commission 2025 Spring Forecast, net expenditure in Malta is
projected to grow by 0.8% in 2025 and 14.9% cumulatively in 2024 and 2025. Based
on the Commission 2025 Spring Forecast, the net expenditure growth of Malta in 2025
is projected to be below the recommended maximum growth rate established by the
corrective path. When considering 2024 and 2025 together, the cumulative growth rate
of net expenditure is projected to be above the recommended maximum growth rate,
corresponding to a deviation14
of 0.2% of GDP. The projected cumulative deviation
12
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.
13
Eurostat, government expenditure by classification of functions of government (COFOG).
14
From 2026 these figures will appear in the control account that is established in Article 22 of the
Regulation (EU) 2024/1263.
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does not exceed the 0.6% of GDP threshold for the cumulative deviation, beyond
which there would be a strong presupposition of no effective action. Therefore, the
excessive deficit procedure for Malta is held in abeyance. At the same time, Malta is
invited to stand ready to take further measures to comply with the corrective path. A
more complete assessment will be carried out when outturn data are available.
(19) Moreover, the Council recommended that Malta wind down the emergency energy
support measures before the 2024/2025 winter. According to the Commission 2025
Spring Forecast, while the net budgetary cost15
of emergency energy support measures
is estimated at 1.1% of GDP in 2024, it is projected at 1.0% in 2025. In particular, cuts
in indirect taxes on energy consumption and subsidies to energy production to
compensate for the price increase of imported electricity remain in force. The
emergency energy support measures were not wound down before the 2024/2025
winter. This is not in line with what was recommended by the Council.
(20) The Annual Progress Report does not include budgetary projections beyond 2025.
Based on policy measures known at the cut-off date of the forecast, the Commission
Spring 2025 Forecast projects a general government deficit of 2.8% of GDP in 2026.
The decrease of the general government balance in 2026 mainly reflects a further
decrease of subsidies. These developments correspond to net expenditure growth of
5.3% in 2026. Based on the Commission’s estimates, the fiscal stance, which includes
both nationally and EU financed expenditure, is projected to be contractionary by
0.8% of GDP, in 2026. The general government debt-to-GDP ratio is projected by the
Commission to decrease to 47.3% by the end of 2026.
Key policy challenges
(21) Tackling aggressive tax planning remains key to improving the efficiency and fairness
of tax systems. In view of the spillover effects of aggressive tax planning strategies
between Member States, coordinated action to complement EU legislation through
national policies by all Member States is paramount. Malta has taken steps to address
aggressive tax planning practices by implementing previously agreed international and
European initiatives, and by implementing reforms committed to in the recovery and
resilience plan, such as the introduction of transfer pricing legislation, which became
applicable as of January 2024. However, until Malta applies withholding taxes – or
equivalent defensive measures – on interest, dividends and royalty payments made by
Malta-based companies to zero and low-tax jurisdictions (here intended to mean any
jurisdiction with a statutory corporate income tax rate below 9%, the lowest statutory
corporate income tax rate in the EU) to ensure that firms cannot shift their profits to
non-EU countries untaxed, the risk of double non-taxation of these profits remains
high. Furthermore, the treatment of resident non-domiciled companies continues to
pose a risk of double non-taxation for both companies and individuals.
(22) In accordance with Article 19(3), point (b), of Regulation (EU) 2021/241 and criterion
2.2 of Annex V to that Regulation, the recovery and resilience plan includes an
extensive set of mutually reinforcing reforms and investments to be implemented by
2026. These are expected to help effectively address all or a significant subset of
challenges identified in the relevant country-specific recommendations. Within this
tight timeframe, finalising the effective implementation of the recovery and resilience
plan including the REPowerEU chapter, is essential to boost Malta’s long-term
15
The figure represents the level of the annual budgetary cost of those measures, including revenue and
expenditure and, where applicable, net of the revenue from taxes on windfall profits of energy suppliers.
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competitiveness through the green and digital transitions, while ensuring social
fairness. The systematic 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 recovery and resilience plan.
(23) The implementation of cohesion policy programmes, which encompass support from
the European Regional Development Fund (ERDF), the Just Transition Fund (JTF),
the European Social Fund Plus (ESF+) and the Cohesion Fund (CF), has accelerated in
Malta. It is important to continue efforts to ensure the swift implementation of these
programmes, while maximising their impact on the ground. Malta is already taking
action under its cohesion policy programmes to boost competitiveness and growth. At
the same time, Malta continues to face challenges, including those relating to skills
shortages and mismatches, accelerating the energy transition, ensuring security of the
water supply and sustainable management of water. In accordance with Article 18 of
Regulation (EU) 2021/1060, Malta is required – as part of the mid-term review of the
cohesion policy funds – to review each programme taking into account, among other
things, the challenges identified in the 2024 country-specific recommendations. The
Commission proposals adopted on 1 April 202516
extend the deadline for submitting
an assessment – for each programme – of the outcome of the mid-term review beyond
31 March 2025. It also provides flexibilities to help speed up programme
implementation and incentives for Member States to allocate cohesion policy
resources to five strategic priority areas of the Union, namely competitiveness in
strategic technologies, defence, housing, water resilience and energy transition.
(24) The Strategic Technologies for Europe Platform (STEP) provides the opportunity to
invest in a key EU strategic priority by strengthening the EU’s competitiveness. STEP
is channelled through 11 existing EU funds. Member States can also contribute to the
InvestEU programme supporting investments in priority areas. Malta could use these
initiatives to support the development or manufacturing of critical technologies,
including clean and resource-efficient technologies.
(25) Beyond the economic and social challenges addressed by the recovery and resilience
plan and other EU funds, Malta faces several additional challenges related to
aggressive tax planning, education and skills, energy and decarbonisation, road
transport, and research and innovation.
(26) Improving innovation outcomes is critical for Malta to maintain its productivity
growth and shift to a more resilient, knowledge-driven economy. Malta’s total R&D
expenditure as a percentage of GDP is the second lowest in the EU (0.61% of GDP in
2023 vs EU average of 2.22%) and has been declining over the last decade. This
concerns both public and private R&D expenditure. Public investment in R&D as a
percentage of GDP is lower than 10 years ago and well below the EU average (0.27%
of GDP in 2023 vs EU average of 0.72%). The picture is similar for private R&D
investment (0.34% of GDP vs EU average of 1.47%). The lack of investment impacts
the excellence of the public research system and the results of innovation. Malta would
benefit from promoting both public and private R&D investment, particularly by
implementing targeted tax incentives.
16
Proposal for a Regulation of the European Parliament and of the Council 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 - COM(2025) 123 final.
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(27) Malta continues to face challenges in achieving green economic growth, which means
balancing economic development with environmental sustainability. The country’s
green transition is held back by the dominant role of fossil fuels in its energy system.
Malta records sizeable fossil-fuel subsidies without a planned phase-out before 2030.
In particular, fossil-fuel subsidies that address neither energy poverty in a targeted way
nor genuine energy security concerns, hinder electrification of transport and are not
crucial for industrial competitiveness could be considered a phase-out priority. In
Malta, fossil-fuel subsidies – such as the ongoing support to Enemalta, subsidies for
petroleum producers, and a reduction of excise duties on petrol and diesel – are
economically inefficient and act as disincentives to the uptake of renewables and the
decarbonisation of economic activities. Moreover, they represent a budgetary burden
on Malta’s public finances. In addition, Malta’s share of energy derived from
renewable sources in gross final energy consumption was only 15% in 2023, one of
the lowest uptakes of renewable energy in the EU. While almost all installed
renewable energy capacity is onshore solar, Malta has significant potential to expand
its renewable energy mix through large-scale offshore wind and solar projects. Malta’s
ability to deploy renewables and to improve its security of energy supply also depends
on good progress in constructing the second electricity interconnector with Italy and
continuing to strengthen and modernise its domestic electricity grid, including by
making it more flexible. Furthermore, while there are some support measures in place
to promote energy efficiency, as well as investments in the renovation of public and
private sector buildings under the Maltese recovery and resilience plan, the final
energy consumption in residential buildings increased by 13.5% between 2018 and
2022. Malta could benefit from further action to promote efficiency gains in the
buildings sector, which would also help achieve the target for reduction of emissions
under the Effort Sharing Regulation.
(28) Addressing traffic congestion and the high emissions from road transport are crucial to
improving competitiveness, quality of life and supporting vulnerable segments of the
population in Malta. There has been an increased uptake of scheduled road public
transport since the extension, in October 2022, of fare-free scheduled road public
transport to cover all Maltese residents, but a significant number of licensed passenger
cars have also been added to Malta’s roads daily since then. The transport sector is the
biggest emitter of greenhouse gases emissions in Malta falling under the Effort
Sharing Regulation. Between 2005 and 2022, greenhouse gas emissions from road
transport increased by 32%. Therefore, there is a need for measures that tackle traffic
congestion by offering quality collective road transport services to decrease the use of
private passenger cars and measures that discourage private passenger car use.
Increasing the quality and efficiency of road public transportation, for example
through the implementation of dedicated bus lanes, and increased investments in
active mobility infrastructure, including improved pedestrian walkways, would
support a greater shift to more sustainable modes of transport and ensure people’s
safety and better quality of life, including for those with impaired mobility.
(29) Shortages of skilled labour as well as skills mismatches are hampering future growth,
competitiveness and the green and digital transitions. The job vacancy rate is among
the highest in the EU, with, among other things, acute shortages in information and
communication technology (ICT), arts, entertainment and recreation, construction
sectors, parts of the service sector, as well as among health and long-term care
professionals, and teachers. Additionally, 64% of firms believe the local labour force
is not adequately prepared for the transition to carbon neutrality. Although improving
and in line with the EU average, adult learning remains well below the 2030 national
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target of 57.6%, with highly educated adults engaging in learning at much higher rates
than adults with lower levels of education. Enrolment in vocational education and
training (VET) remains far below the EU average, and at upper-secondary level, only
around one in three students were enrolled in science, technology, engineering and
mathematics (STEM) fields in 2023, below the EU average. The share of tertiary
students enrolled in STEM subjects is one of the lowest in the EU at 13.9%, with only
5.1% in ICT, and even lower amongst women. Persistently insufficient basic skills
point to systemic shortcomings in the education system. Due to a lack of adequately
qualified teaching staff and ineffective teaching practices and curricula, the system
insufficiently caters for all children, including pupils with a disability. Every third 15-
year-old lacks basic skills in mathematics, reading and science, and about half of
pupils in the 8th grade (12- to 13-year-olds) lack basic digital skills. Despite
improvements in recent years, about 1 in 10 students still leave education or training
early, increasing the already large pool of low-skilled adults. Strengthening the quality
and labour-market relevance of education and training, in particular by strengthening
students’ basic skills and the initial and continuous training of teachers as well as
promoting enrolment in VET and in adult learning for low-skilled people, are key to
improving the low educational outcomes and reducing the severe shortage and
mismatch of skills, also in the area of STEM and the green transition.
(30) In view of the close interlinkages between the economies of euro-area Member States
and their collective contribution to the functioning of the economic and monetary
union, in 2025, the Council recommended that the euro-area Member States take
action, including through their recovery and resilience plans, to implement the 2025
Recommendation on the economic policy of the euro area. For Malta,
recommendations (2), (3), (4) and (5) help implement the first euro-area
recommendation on competitiveness, while recommendations (4) and (5) help
implement the second euro-area recommendation on resilience, and recommendation
(1) helps implement the third euro-area recommendation on macroeconomic and
financial stability set out in the 2025 Recommendation.
HEREBY RECOMMENDS that Malta take action in 2025 and 2026 to:
1. Reinforce overall defence spending and readiness in line with the European Council
conclusions of 6 March 2025. Adhere to the maximum growth rates of net
expenditure recommended by the Council on 21 January 2025, with a view to
bringing an end to the situation of an excessive deficit. Wind down the emergency
energy support measures. To address remaining aggressive tax planning risks,
introduce a withholding tax on outbound payments or equivalent defensive measures,
and amend rules on non-domiciled companies.
2. In view of the applicable deadlines for the timely completion of reforms and
investments under Regulation (EU) 2021/241, ensure the effective implementation of
the recovery and resilience plan, including the REPowerEU chapter. Accelerate the
implementation of cohesion policy programmes (ERDF, JTF, ESF+, CF), building,
where appropriate, on the opportunities offered by the mid-term review. Make
optimal use of EU instruments, including the scope provided by the InvestEU and the
Strategic Technologies for Europe Platform, to improve competitiveness.
3. Promote investment in research and innovation, including by increasing public R&D
investment and stimulating private R&D investment, for example through R&D tax
incentives.
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4. Accelerate the deployment of renewable energy by promoting large-scale projects
and small-scale investments in direct energy production and consumption. Reduce
energy demand through improved energy efficiency in buildings. Reduce emissions
from road transport and address traffic congestion by promoting quality and efficient
public transport, stepping up investments in active mobility infrastructure and
discouraging car usage. Phase out fossil fuel subsidies, including emergency energy
support measures.
5. Strengthen the quality and labour-market relevance of education and training to
address low educational outcomes as well as the severe shortage and mismatch of
skills, also in the area of science, technology, engineering and mathematics (STEM)
and the green transition, in particular by fostering basic skills of students, the initial
and continuous training of teachers as well as promoting enrolment in vocational
education and training, and in adult learning for the low-skilled. Strengthen the
inclusiveness of education and training.
Done at Brussels,
For the Council
The President