On 22 June 2026, the Council of the European Union adopted a recommendation outlining specific economic, social, employment, structural and budgetary policies for Malta, including adherence to its medium-term fiscal-structural plan and addressing identified challenges in areas such as energy subsidies, tax compliance, pensions, R&D, and judicial efficiency.
The recommendation, to be formally approved at a Council meeting on 24 June 2026, sets maximum net expenditure growth rates for Malta: 6.0% in 2025, 5.8% in 2026, 5.8% in 2027, and 6.1% in 2028, with cumulative growth from the 2023 base year reaching 35.1% by 2028. The Commission projects Malta's general government deficit at 2.2% of GDP in 2026 and 2.1% in 2027, while debt-to-GDP is projected at 46.2% by end-2026 and stable at that level by end-2027.
The Council urges Malta to phase out untargeted energy subsidies, which carry a fiscal cost projected at 1.4% of GDP in 2026, and to improve tax compliance, including applying withholding taxes on payments to zero- or low-tax jurisdictions to prevent double non-taxation. On pensions, the recommendation calls for strengthening supplementary pensions to improve retirement income adequacy and address fiscal pressures from demographic ageing.
In structural policies, the Council recommends boosting R&D investment, which stood at 0.54% of GDP in 2024 against an EU average of 2.24%, and attracting high-skilled labour. It also urges reducing judicial delays, noting that civil and commercial case resolution times are among the highest in the EU. On energy and environment, Malta should accelerate renewable energy deployment, which reached 17.2% in 2024, and address traffic congestion.
The recommendation is part of the European Semester cycle and will guide Malta's policy formulation. The Council's guidance is non-binding but carries political weight; Malta is expected to report on progress in its national reform programme and stability programme updates. The European Commission will monitor implementation and may issue further recommendations if needed.
Maltese taxpayers and energy consumers could face higher costs as untargeted subsidies are phased out, but improved tax compliance may broaden the tax base. Businesses, particularly in R&D-intensive sectors, stand to benefit from increased innovation support. Pensioners may gain from stronger supplementary pensions, while the judicial system's efficiency improvements could reduce costs for firms and citizens. The renewable energy sector is likely to see accelerated deployment, supporting Malta's green transition goals.