Valdis Dombrovskis – Photo EC
(BRUSSELS) – The EU Commission recast its economic policy guidance Wednesday towards recovery which achieves sustainable and inclusive growth while mitigating the socio-economic consequences of COVID-19.
Its European Semester Spring Package recommends country-specific recommendations (CSRs) focuses on the most urgent challenges brought about by the pandemic, and moves in the medium-term to facilitating its plans for ‘green transition’ and ‘digital transformation’.
“As we shift to the recovery, the Semester will be essential in providing a coordinated approach to put our economies back on the track to sustainable and inclusive growth – no one should be left behind,” said EC vice-president Valdis Dombrovskis: “We also need reforms to improve productivity and the business environment. Once conditions allow, we will need to strike a balance between achieving fiscal sustainability while also stimulating investment.
The Commission recommendations are structured around two objectives: in the short-term, mitigating the coronavirus pandemic’s severe negative socio-economic consequences; and in the short to medium-term, achieving sustainable and inclusive growth which facilitates the green transition and the digital transformation.
The Annual Sustainable Growth Strategy outlined the Commission’s growth strategy, based on promoting competitive sustainability to build an economy that works for people and the planet. With the outbreak of the coronavirus crisis this remains of utmost importance. The recommendations cover the four dimensions of competitive sustainability – stability, fairness, environmental sustainability and competitiveness – and also place a specific emphasis on health. The recommendations also reflect the Commission’s commitment to integrating the United Nations’ Sustainable Development Goals into the European Semester as they offer an integrated framework encompassing public health, social, environmental and economic concerns.
The recommendations cover areas such as investing in public health and resilience of the health sector, preserving employment through income support for affected workers, investing in people and skills, supporting the corporate sector (in particular small and medium-sized enterprises) and taking action against aggressive tax planning and money laundering. Recovery and investment must go hand-in-hand, reshaping the EU economy faced with the digital and green transitions.
The fiscal CSRs this year are qualitative, departing from the budgetary requirements that would normally apply. They reflect the activation of the general escape clause, recommending that Member States take all necessary measures to effectively address the pandemic, sustain the economy and support the ensuing recovery. When economic conditions allow, fiscal policies should aim at achieving prudent medium term fiscal positions and ensuring debt sustainability, while enhancing investment.
Monitoring fiscal developments
The Commission has also adopted reports under Article 126(3) of the Treaty on the Functioning of the EU for all Member States except Romania, which is already in the corrective arm of the Pact.
The Commission is required to prepare these reports for Member States that are themselves planning for reasons related to the coronavirus – or are forecast by the Commission, to breach the 3% deficit limit in 2020. The reports for France, Belgium, Cyprus, Greece, Italy and Spain also assess these Member States’ compliance with the debt criterion in 2019, based on confirmed data validated by Eurostat.
These reports take into account the negative impact of the coronavirus pandemic on national public finances. In light of the exceptional uncertainty related to the extraordinary macroeconomic and fiscal impact of the pandemic, the Commission considers that at this juncture a decision on whether to place Member States under the excessive deficit procedure should not be taken.
Surveillance reports for Greece, Spain and Cyprus
The Commission adopted the sixth enhanced surveillance report for Greece. The report concludes that, considering the extraordinary circumstances posed by the Coronavirus outbreak, Greece has taken the necessary actions to achieve its due specific reform commitments.
The Commission has also adopted the post-programme surveillance reports for Spain and Cyprus.
European Semester 2020 Spring Package - background guide
Factsheet: European Semester Spring Package
Communication on the country-specific recommendations
Country-specific recommendations
Sixth enhanced surveillance report for Greece
