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European Semester Autumn Package

17 December 2019
by eub2 -- last modified 17 December 2019

The von der Leyen Commission launched a new European Semester cycle on 17 December, the first of its mandate. It presented an ambitious, rebooted growth strategy focused on promoting competitive sustainability to build an economy that works for people and the planet.


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What does today's package include?

The European Semester Autumn Package represents the beginning of the 2020 European Semester cycle of economic and social policy coordination.

Today, the Commission presents:

The Annual Sustainable Growth Strategy

The Annual Sustainable Growth Strategy (ASGS) is the Commission's main tool for setting the general economic and employment priorities for the EU at the beginning of each European Semester cycle.  

Those priorities will form the basis for the Country-Specific Recommendations addressed to individual Member States in the European Semester Spring Package.

The Annual Growth Survey is now the Annual Sustainable Growth Strategy. What does the new name bring?

The new name reflects the Commission's focus on a sustainable and inclusive economic model that will put people and climate first, as put forward by President von der Leyen's Political Guidelines.

This fresh emphasis is, in turn, reflected throughout the ASGS. The ASGS presents a rebooted growth model which focuses on the issue of sustainability and is built around the four dimensions of environmental sustainability, productivity gains, fairness and macroeconomic stability. These priorities will run throughout the entire Semester Process and – with the integration of the UN Sustainable Development Goals (SDGs) into the Semester – will ensure that the new growth model works for people and the planet.

What are the main priorities in the Annual Sustainable Growth Strategy?

The ASGS sets out a new strategy on how to address not only the short-term economic challenges but also the economy's longer-term challenges. These include the transition to a sustainable and inclusive economy, technological progress, sustainable solutions and demographic changes. This new economic agenda reflects the ambition of the European Green Deal. This agenda of competitive sustainability rests on four dimensions: environmental sustainability, productivity gains, fairness and macroeconomic stability.

All four broader strategic objectives are linked to specific policies and goals:

  • Environmental sustainability based on structural reforms, innovation and public and private investments in green technologies and sustainable solutions in virtually all sectors of our economy, from industrial production to transport, energy, and housing.
  • Productivity growth based on investments and structural reforms to foster research and innovation, the digitisation of all sectors, enhancing the functioning of product and services markets, providing the right skills to our workforce and a business environment conducive to growth.
  • Fairness based on equal opportunities, fair working conditions, a decent living, social protection and paying particular attention to the regions, industries and workers who will have to make the largest transitions.
  • Macroeconomic stability based on sound and sustainable public finances to ensure that fiscal policy can fulfil all of its functions, addressing imbalances and completing Europe's Economic and Monetary Union.

How are the UN Sustainable Development Goals being integrated into the European Semester?

Integrating the objectives of the UN Sustainable Development Goals (SDGs) in the European Semester will put people and the planet at the centre of our economic policy.

The contribution towards achieving the SDGs will require contributions from all levels, reflecting the division of competences between Member States and EU institutions. As far as Member States' contribution is concerned, close coordination of efforts is necessary. Over the past decade, the European Semester has established itself as the key tool for the coordination of national economic and employment policies. As such, it can help drive these policies towards the achievement of the SDGs by monitoring progress and ensuring closer coordination of national efforts in the area of economic and employment policies.

The broader economic narrative put forward in the ASGS is the starting point of the European Semester. It will continue with the 2020 Country Reports, the Commission's analysis of the Member States' social and economic situation. The Country Reports will feature a reinforced analysis and monitoring on the SDGs, including on the contribution of macro-economic policies to their delivery.

Building on the Country Reports, the Commission's proposals for the 2020 Country-Specific Recommendations, to be adopted in May, will highlight the contribution of national reforms to progress towards delivering on specific SDGs, where instrumental to ensure the coordination of economic and employment policies on economic challenges that are a matter of common concern.

What is the current economic outlook?

The European economy is now in its seventh consecutive year of growth and is forecast to continue expanding in 2020 and 2021, although at a more moderate pace.

Labour markets remain strong and unemployment continues to fall, though at a slower pace. 17.4 million jobs have been created in the EU and 11.4 million in the euro area since the height of the financial crisis.The unemployment rate in the EU28, at 6.3% in October 2019, is the lowest rate recorded since the start of the century, when harmonised data was first recorded for all EU Member States. The unemployment rate in the euro area (7.5%) is at its lowest since June 2008.

However, the external environment has become much less supportive and uncertainty is running high. As a result, the European economy looks to be heading towards a period of more subdued growth. The euro area economy is now forecast to expand by 1.1% in 2019 and by 1.2% in 2020 and 2021. For the EU as a whole, GDP is forecast to rise by 1.4% in 2019, 2020 and 2021.

The recommendation on the economic policy of the euro area

The euro area recommendation presents tailored advice to euro area Member State on those topics that affect the functioning of the euro area as a whole. The recommendation is published at the beginning of the European Semester cycle, ahead of country-specific discussions, in order for common challenges to be addressed and collectively reflected in country-specific actions.

What is the 2020 euro area recommendation?

In line with the new economic strategy, this year there is a stronger focus on the need to tackle the long-term challenges such as climate change, deteriorating demographics and technological transformation.

The recommendation on the economic policy of the euro area call for specific measures to correct imbalances. The Commission also recommends to all Member States to improve productivity, further deepen the Single Market and support a fair and inclusive transition towards a competitive, green and digital economy.

On the fiscal side, differentiation is essential. High-debt level Members need to put debt on a sustainable downward path and those with a favourable fiscal position should use it to further boost high quality investments. In case of a worsening outlook, the Commission also recommends a supportive fiscal stance at the aggregate level while ensuring full respect of the Stability and Growth Pact.

The Commission recommends strengthening education, training systems and investment in skills. Member States should increase the effectiveness and participation in the labour market, including that of women, and shift taxes away from labour, in particular for low-income and second earners.

Finally, the Commission calls for ambitious progress in deepening the Economic and Monetary Union, by completing the Banking and Capital Markets Union, with the perspective to strengthen the international role of the euro and Europe's economic sovereignty.

The Alert Mechanism Report

The so-called "six-pack" legislation adopted in 2011 introduced a system to monitor broader economic developments, to detect early on problems such as credit and property bubbles, issues in external sustainability or falling competitiveness. The Macroeconomic Imbalance Procedure (MIP) is integrated in the European Semester and is kicked-off by an Alert Mechanism Report (AMR) that identifies Member States for which the Commission should undertake in-depth reviews to assess whether they are experiencing macroeconomic imbalances. The analysis in the AMR is based on the economic reading of a scoreboard of agreed indicators.

What are the main findings of this Alert Mechanism Report?

This year's Alert Mechanism Report (AMR) has identified 13 Member States to be subject to an in-depth review in 2020.

These are Bulgaria, Croatia, Cyprus, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Romania, Spain, and Sweden.

Each of these Member States were subject to a review in the previous annual cycle of Macroeconomic Imbalances Procedure (MIP) and were found to experience imbalances or excessive imbalances. The new reviews will help to assess whether those imbalances are  being corrected.

The Commission will present the findings of the in-depth reviews in the Country Reports which will be published as part of the European Semester Winter Package.

As economic growth is forecast to moderate and risks are increasing, Member States need to press ahead with addressing imbalances, to place their economies on a stronger footing to confront long-term challenges.

Proposal for a Joint Employment Report  

The Joint Employment Report (JER) is mandated by Article 148 of the Treaty on the Functioning of the European Union (TFEU). It provides an annual overview of the main employment and social developments in the EU. In addition, the Joint Employment Report 2020 monitors Member States' performance in relation to the Social Scoreboard accompanying the European Pillar of Social Rights.

What are the main findings of the proposal for a Joint Employment Report (JER)?

Employment continues to increase, though at a slower pace than in past years. The number of people in employment reached a record high with 241.5 million people now employed in the EU. At the same time, unemployment has reached an historic low of 6.3%. Steady progress is being made in increasing the employment of older workers and reducing the unemployment of young people, though youth unemployment remains a serious concern in some Member States.

The number of people at risk of poverty or social exclusion continued to decline in 2018 for the sixth consecutive year. However, some groups - particularly children and people with disabilities - face a substantially higher risk of poverty or social exclusion. In spite of improving labour market conditions, and wage growth gaining pace, the rate of in-work poverty remains high overall in the EU: around one worker out of 10 is at risk of poverty while in employment. Adequate minimum wages, whether statutory or collectively bargained, can help prevent this phenomenon and reduce wage inequality and support aggregate demand.

Income inequality slightly increased overall and remains at a high level compared to the pre-crisis period. Gender gaps between men and women persist in terms of both employment rate and pay. Parenting and elderly caring responsibilities, limited access to care services, and unequal pay are the main drivers of lower employment rates for women. Pay gaps occur in spite of women having on average higher qualification levels than men. Concrete measures to tackle the gender pay gap, mostly related to pay transparency, are only in place in a limited number of countries. Participation of adults in learning remains low, in particular for the low-skilled. Several groups (notably self-employed and non-standard workers) still face difficulties in accessing social protection in several Member States.

What happens next with the draft Report?

The current proposal, presented by the Commission, will be discussed with the Employment Committee and the Social Protection Committee, with a view to final adoption by the Employment, Social Policy, Health and Consumer Affairs Council (EPSCO) in March 2020.

Single Market Performance Report

The 2019 Single Market Performance Report is an in-depth report of the European Union's Single Market from the perspective of economic outcomes. It deals with goods and service markets and competition on those markets. It also has a closer look at energy, infrastructure and the environment, public procurement, digital markets and capital markets.

The Single Market ranks at the top among the greatest accomplishments of European integration. For over 25 years, it has been delivering growth, jobs, legal certainty to business, a wide choice of safe products to consumers and guaranteeing the free movement to EU citizens within Member States. It is part of our daily life, interweaving the activities of businesses and consumers across borders. The Single Market and its benefits should not be taken for granted: without the Single Market, the EU GDP would be 8.5 percent lower than it is today.

What are the key findings of the SMPR 2019?

The key findings of the report include the following points:

  • Goods markets present a high level of integration. Services markets present the highest potential for further integration, but regulatory barriers still hamper integration.
  • In some sectors, weak competition prevents consumers and businesses from reaping the full benefits from the Single Market.
  • The Single Market is contributing significantly to the digitalisation of Europe's economy but its lasting performance requires the reinforcement and further development of the current digital ecosystem.
  • Significant progress has been achieved in the integration of energy markets, but cross-border energy trade and competition in energy markets must be improved.
  • Ensuring high standards of environmental protection and product safety is a major component of the performance of the Single Market spanning over a broad range of economic activities. The size and importance of the Single Market gives Europe a high profile and influence on global issues such as climate protection and the respect of the rule of law and human rights.
  • At the core of the Single Market, standardisation plays a key role to further the EU sustainable development agenda.
  • The Single Market has gone a long way in integrating public procurement across Europe, but the performance in public procurement could still be improved.
  • The Single Market provides a stable and predictable environment for businesses that can provide a safe-harbour to carry out operations internally and across the globe. 
  • The size and importance of the Single Market give Europe a high profile and influence on global issues such as climate protection and the respect of the rule of law and human rights.

Why is the Single Market Performance report now part of the Autumn package?

The consideration of cross-border activities in the Single Market will help better understand the spillover effects of national policy measures and the impact of structural reforms, not just at the domestic level but also for the Union as a whole. While the Semester country reports and country-specific recommendations focus on Member States, this report takes a broader EU level perspective and zooms on the Single Market's overall deliverables.

Annual Monitoring Report on the Structural Reform Support Programme

What is the Annual Monitoring Report on the Structural Reform Support Programme? How does it fit into the European Semester?

The Structural Reform Support Programme entered into force in May 2017 and has a budget of €222.8 million until 2020. It provides tailor-made expertise on the practical aspects of reforms in Member States. The programme is available to all EU Member States upon their request.

The Commission monitors how support measures financed by the programme are implemented and provides an annual monitoring report for each year of the implementation. In 2018, 146 requests from 24 Member States were selected for funding from the programme. 93% relate directly to the strategic priorities of the EU such as the implementation of reform challenges highlighted in the European Semester process; implementation of Union priorities, including the establishment of a capital markets union, a digital single market and an energy union); and EU law. The remaining 7% are linked to the implementation of Member States' own reforms.

Source: European Commission