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According to the Commission, the European Semester process is the key vehicle to focus the EU states' attention on their most important socio-political challenges. Gradually, the European Semester takes a more central role also in domestic policy debates on fiscal and macroeconomic challenges.  

Main instrument in implementing economic coordination are the “country reports”, i.e. country-specific recommendations. Member states’ approach to “deeper coordination” is mixed, despite the fact that these recommendations go through a very thorough adoption process: recommendations proposed by the Commission are carefully screened by both the Council of Ministers and the European Council. Besides, and it’s also important, that these recommendations are approved at the national level.

The role of the European Parliament and national parliaments in “political economy” becomes crucial: the national parliaments would undergo “inner evolution” to become more intensively and more regularly involved in the national decision-making process and national practices.

The Commission has had constant and detailed discussions with national parliaments, social partners and other “actors” in this regard.  

European Semester process

Following the publication in November 2015 of the Annual Growth Survey 2016 and the euro area recommendation, which set out the priorities at European level, the new reports shift the attention of the European Semester to the national dimension. The reports will serve as the basis for discussion with the member states of their national policy choices ahead of their National Programmes in April 2016, and will lead to the formulation in late spring of the Commission's Country-Specific Recommendations.

Background

Early publication of the “country reports” in February (see: Country Reports) is part of the efforts to streamline and strengthen the European Semester, in line with the Five Presidents' Report and the steps announced by the Commission to complete Europe's Economic and Monetary Union.

Some of these steps were initiated in 2015, and the practice is confirmed this year, in order to allow for a real dialogue on European priorities, including euro area challenges, upfront at the start of the European Semester, and then to give more time for dialogue with the EU states at all levels to reflect on their priorities.

The Reports also reflect the greater focus on employment and social considerations which the Commission is bringing into the European Semester.

Reference: Commission press release IP-16-332, “European Semester 2016: Commission publishes country reports”. Brussels, 26 February 2016.

Supporting macroeconomic stability

Most of all, the states need to implement policies that support macroeconomic stability and confidence. This includes efforts in some EU countries to address issues of high public and private debt and high external debt.

Recent improvements on the employment and social side in the states have shown a slight reduction in the disparities among the EU states in key social and labour market indicators (decision to publish annual country reports at the end of February). Some member states have been already successfully tackling structural shortcomings, but the pace is uneven: the reforms are slowing down as market pressures have eased...

A number of EU states still need to carry out genuine reforms in many areas to unlock Europe's growth potential and be better prepared for new challenges and risks. The EU economic policy coordination provides for coherence and continuity to the member states’ actions.

Hence, economic policy directions should not be driven by market sentiment alone, but by a sense of what is good for both the member states and for citizens.

New economic progress

The EU’s approach to creating new economic progress is built on the 3-way approach. This means boosting investment, pursuing structural reforms to modernise member states’ economies and continuing fiscally-responsible policies.

Early in 2016, EU economic ministers agreed on the publishing “countries’ recommendations” in February each year so that the states can take them into account as they shape their national policies.

Member states’ economic ministers have decided to include one additional euro-area recommendation concerning the countries’ commitment to work on “deepening the EMU”.

Commission’s opinion

Commission Vice-President Valdis Dombrovskis, responsible for the euro zone underlined that keeping in mind growing external risks and increased volatility in financial markets, it was urgent to strengthen the fundamentals of member states’ economies. Thus, the Commission's analysis shows that reforms are being carried out on a number of policy areas; however, he added, these effort have been uneven: a number of states still need to be more decisive in tackling persistent vulnerabilities, such as high public and private debt.

Commissioner Marianne Thyssen, responsible for employment and labour mobility, said that although the EU states had reached the highest employment rate since the beginning of the crisis in 2008, still too many Europeans have been unemployed. Through the European Semester, she added, the Commission remained committed to help the states in getting people back to jobs.

Commissioner Pierre Moscovici, responsible for EU’s economic and financial affairs, while commenting on the report, underlined that the “reports” presented the most accurate and detailed picture of EU economies. The in-depth analyses will be the basis for the necessary dialogue between the EU institutions and national authorities in spring 2016, in view of the next set of Country-Specific Recommendations. Boosting jobs and growth remains EU first objective; as recovery remains fragile, the Commission urged EU states to continue reforming their economies and fixing persistent macroeconomic imbalances.

For 18 states identified in the Alert Mechanism Report 2016 published in November 2015, alongside the Annual Growth Survey, the “country reports” include the In-Depth Review under the Macroeconomic Imbalances Procedure (MIP). Greece and Cyprus, which are currently under stability support programmes, are not covered by country reports at this stage.

European Semester’ perspectives

The Commission is obliged within the European Semester structure to pursue a close dialogue with the EU member states: thus, in March, the Commission will hold bilateral meetings with the states on “country reports”.

Commissioners will also visit states to meet national governments, parliaments, social partners and others. In return, the EU states are required to present in April their National Reform Programmes and their Stability Programmes (for euro area countries) or Convergence Programmes (for non-euro area countries), covering public finances.

The Commission has called on EU states to consult closely national parliaments and the social partners when preparing these documents. The Commission will then present its proposals for a new set of Country-Specific Recommendations in spring, targeting the key economic and social priorities for each country.

Also in March 2016, the Commission will decide on the Macroeconomic Imbalances Procedure (MIP) category for each EU state covered by an In-Depth Review. Beginning with 2016, the Commission has reduced MIP from six to four categories of macroeconomic imbalances, i.e. a) no imbalances, b) general imbalances, c) excessive imbalances, and d) excessive imbalances with corrective action.

Further information on the European Semester:

= The start of the 2016 European Semester: The November European Semester package explained;

= The EU's economic governance explained;

= Alert Mechanism Report 2016;

= Winter 2016 Economic Forecast;

= http://europa.eu/rapid/press-release_IP-16-332_en.htm.