How to further strengthen the European Semester?

20-11-2017

The emphasis of the European Semester should shift from economic policy coordination – intended as the process through which Member States commit to common rules and recommendations adopted by the Council of the European Union under the surveillance of the European Commission – to a stronger national ownership. Coordination of national policies may be essential at times of crisis, when cross-country spillover effects tend to be large, but it may not be very effective when economic conditions return to normal, as spillovers tend to be small and the incentives for governments to coordinate lessen. Stronger national ownership should lead to better enforcement of commonly agreed rules, regardless of economic conditions and should take away the perception that rules are hierarchically imposed. National ownership could be improved by involving the national fiscal councils and the national productivity boards explicitly in the elaboration of EU? recommendations for national governments. This should be done without increasing the complexity of an already complicated EU governance system of governance or damaging their reputation as independent bodies. Reforms aiming to improve the structural functioning of the EU’s economies are of critical importance for Member States, yet the reasons why specific reforms should be embedded in the Semester are not always clear. Moreover, strengthening the Semester by further linking the EU budget to reforms undertaken in the Member States is fine in theory but very difficult in practice. Reforms cannot be ‘bought’ as such and it would be extremely difficult to measure the implementation of the CSRs precisely enough to make implementation a condition for funds. The role of the Commission should remain predominant in fostering coordination in case of economic crisis and in providing technical support for reforms whenever needed.

The emphasis of the European Semester should shift from economic policy coordination – intended as the process through which Member States commit to common rules and recommendations adopted by the Council of the European Union under the surveillance of the European Commission – to a stronger national ownership. Coordination of national policies may be essential at times of crisis, when cross-country spillover effects tend to be large, but it may not be very effective when economic conditions return to normal, as spillovers tend to be small and the incentives for governments to coordinate lessen. Stronger national ownership should lead to better enforcement of commonly agreed rules, regardless of economic conditions and should take away the perception that rules are hierarchically imposed. National ownership could be improved by involving the national fiscal councils and the national productivity boards explicitly in the elaboration of EU? recommendations for national governments. This should be done without increasing the complexity of an already complicated EU governance system of governance or damaging their reputation as independent bodies. Reforms aiming to improve the structural functioning of the EU’s economies are of critical importance for Member States, yet the reasons why specific reforms should be embedded in the Semester are not always clear. Moreover, strengthening the Semester by further linking the EU budget to reforms undertaken in the Member States is fine in theory but very difficult in practice. Reforms cannot be ‘bought’ as such and it would be extremely difficult to measure the implementation of the CSRs precisely enough to make implementation a condition for funds. The role of the Commission should remain predominant in fostering coordination in case of economic crisis and in providing technical support for reforms whenever needed.