European Semester improvement

In “Deeper and fairer Economic and Monetary Union”

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The European Semester, which was institutionalised by the 'six-pack' legislation in 2011 (specifically in Regulation 1175/2011), is a yearly policy cycle, which aims at coordinating and monitoring the economic and employment policies of EU Member States. As part of this process, the Commission analyses the fiscal and structural reform needs and policies, and provides recommendations to be adopted by Council. Once adopted, the Member States commit to implementing the commonly agreed policy recommendations.

In practice, the European Semester begins with the publication of the Alert Mechanism Report (AMR) and the Annual Growth Survey (AGS) by the Commission in November. The former gives details about macroeconomic imbalances that the Commission has identified in Member States. In April, Member States submit their Stability or Convergence Programmes and National Reform Programmes, which are, in turn, assessed by the Commission. Then the Commission proposes country-specific recommendations (CSRs), which are subsequently endorsed by the European Council and adopted thereafter by the Ecofin Council.

Against the backdrop of the 'Six Pack' and 'Two Pack' reviews, the Commission decided to start overhauling the functioning of the European Semester in 2015. The Commission's output has indeed been simplified: in late February, it releases country reports, which analyse the economic policies of EU Member States and the euro area as a whole. They also include an evaluation of progress made by Member States in addressing last year's CSRs, and in-depth reviews for all EU Member States identified in the AMR and assessing potential imbalances, in accordance with the Macroeconomic Imbalance Procedure.

Compared to the previous Semesters, those country-specific documents are published three months earlier than the previous staff working documents, which used to be released together with the new set of CSRs. The Commission insists it has strengthened and intensified the involvement of national parliaments, social partners and all key stakeholders, and reinforced communication and the ownership role at national level.

In addition, the set of CSRs has also been streamlined: there are fewer and more targeted recommendations for each Member State while their focus is further in line with the priorities set out in the AGS. On average, Member States received about 4 CSRs in 2015 and 3.3 in 2016 compared to 6 between 2012 and 2014.

The European Commission has also taken extra steps towards the revamping of the Semester in line with the Five Presidents' Report. It has engaged further with the European Parliament within the framework of the 2016 and 2017 European Semesters. In this regard, a plenary debate took place in November 2015 and 2016, in which Commission Vice-President Valdis Dombrovskis discussed the key economic priorities for the EU ahead of the adoption of the 2016 and 2017 Annual Growth Surveys, respectively. Similarly, an exchange of views with the Commission and Eurogroup Presidents took place in the plenary session of 15 December 2015 to discuss the draft euro-area recommendations proposed by the Commission (alongside the 2016 AGS) in late November (instead of May in the previous exercises) so as to put further emphasis on the euro-area dimension.

In a resolution on the European Semester and the implementation of the 2016 priorities adopted in late October 2016, the European Parliament welcomed the Commission’s ‘approach of streamlining the Semester process focusing on a limited set of recommendations in line with the priorities of macroeconomic and social relevance'. It also 'fully supports the efforts made to ensure greater national ownership in the formulation and implementation of CSRs as an ongoing reform process'. Those adjustments are also broadly in line with the recommendation put forward by the European Parliament in its resolution on the review of the economic governance framework: stocktaking and challenges adopted on 24 June 2015. Indeed, the European Parliament insisted 'that the Annual Growth Survey (AGS) as well as the country-specific recommendations (CSR) must be better implemented and take into account the assessment of the budgetary situation and prospects both in the euro area as a whole and in the individual Member States', and suggested 'that this overall assessment foreseen in Regulation (EU) No 473/2013 on common provisions for monitoring and assessing draft budgetary plans and ensuring the correction of excessive deficit of the Member States in the euro area should be submitted to a plenary debate of the European Parliament with the Council, the President of the Eurogroup and the Commission prior to the Spring Council and properly implemented throughout the European Semester'. In addition, the Parliament believed that ‘the European Semester should be streamlined and reinforced, without modifying the current legal framework, and that Semester-related documents should be better coordinated, thus increasing focus, effectiveness and ownership to achieve the European goals of good economic governance'.

It is to be noted that enforcement mechanism do not exist in relation with the economic policy recommendations. Therefore, except for the excessive deficit procedure (EDP) and the excessive imbalances procedure (EIP), the implementation of country-specific recommendations by the Member States cannot be enforced, thus non-implementation cannot lead to sanctions, and the countries’ implementation ratio for CSRs is not only low but also in decline.

In its Communication on further steps towards completing Europe's economic and monetary union, published on 6 December 2017, the Commission announced the long term goal of having the EU fiscal rules reviewed by 2025, in order to achieve a substantial simplification of the framework.

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Author: Christian Scheinert, Members' Research Service, legislative-train@europarl.europa.eu

As of 20/11/2019.