On 23 June 2026, the Council approved an explanatory note under Article 29 of Regulation 2024/1263, detailing changes to the 2026 Country-Specific Recommendations (CSRs) where the Commission disagrees, and additions or technical changes the Commission fully supports. The note publicly justifies two specific disagreements with Commission CSR proposals for Czechia and Lithuania, while noting full support for other factual or technical changes.
The "comply or explain rule" requires the Council to follow Commission recommendations or publicly explain its position. For Czechia (CSR 3), the Council agreed with the Commission text on improving affordable housing via public/non-profit sectors and tax reforms, but explains tax measures should be complementary to other structural factors. For Lithuania (CSR 3), the Council disagreed with recommending stronger supplementary pension schemes to improve SME access to finance, as they contributed little to SME finance and funnelled savings outside the EU.
This is the first Council intervention on the 2026 CSRs, with no prior coverage in the last 180 days. The note will accompany the final CSRs to be adopted by the Council. The European Commission is expected to respond to the Council's explanations in due course.
Stakeholder impact The Council's divergence from the Commission on Czechia's CSR 3 may reduce pressure on Czech authorities to implement tax reforms as a primary tool for housing affordability, potentially benefiting the construction sector and non-profit housing providers but delaying fiscal consolidation. For Lithuania, the rejection of stronger supplementary pension schemes removes a potential regulatory burden on SMEs, preserving their access to domestic savings, but may slow the development of private pension markets and reduce long-term retirement savings options for workers. The Commission's role as agenda-setter is slightly weakened by the Council's use of the comply-or-explain mechanism, reinforcing inter-institutional balance.
Institutional follow-up The Council will formally adopt the final CSRs at a subsequent meeting. The Commission may issue a response to the Council's explanations, and the European Parliament could debate the divergences in its economic governance dialogue.