European Semester 2013 Country-specific recommendations

Size: px

Start display at page:

Download "European Semester 2013 Country-specific recommendations"

Buck Newton
7 years ago
Views:

1 European Semester 2013 Country-specific recommendations Marcel Haag, Head of Unit, Secretariat General, European Commission Unit D 1 Europe 2020, Competitiveness and Innovation

2 Economic context Economic situation has continued to deteriorate in early 2013, albeit at a decreasing pace and the social consequences are being felt Unemployment is reaching new heights and the risks of poverty and social exclusion are rising The challenge is to sustain improvements in financial markets and to restore confidence, whilst also carrying out structural reforms for the medium-term Decisive policy measures have already been taken, but it will be crucial to maintain the pace of reforms, recognising the specific needs of each Member State Real GDP, EU Source: Commission Services q-o-q% index, 2007= GDP growth rate (lhs) GDP (quarterly), index (rhs) GDP (annual), index (rhs) forecast Figures above horizontal bars are annual growth rates. Employment growth and unemployment rate in EU Source: Commission Services % % of the labour force forecast Employment (q-o-q%, lhs), forecast (y-o-y%, lhs) Unemployment rate (rhs), forecast (rhs) Forecast figures are annual data

3 Measures to tackle the crisis Measuressetin ad hoc, temporary, or'soft-law' frameworks Permanent institutional frame set in secondary legislation or international treaties Financial crisis Temporary State aid framework Bank rescues ESFS Fin. sector legislation (CRD IV, CRR etc.) Economic crisis EERP Europe 2020 European Semester 6-Pack Sovereign debt crisis GLF EFSF, EFSM SMP, LTRO ESM 2-Pack TSCG OMT SSM Crisis of confidence area cohesion Future measures Banking Union Fiscal Union Integrated economic policy framework Political Union 3

4 The European Semester January February March April May June July European Commission Annual Growth Survey and other reports Proposals for country-specific recommendations Council of Ministers European Parliament Debate & orientations Debate & orientations Discussion in Council formations Autumn: Monitoring and peer review at European level European Council Spring EU summit: overall guidance on EU priorities Endorsement of country-specific recommendations Member States Adoption of National Reform Programmes (NRPs) & Stability and Convergence Programmes (SCPs) Autumn: Implementation at national level

5 What is covered in the recommendations? Integrated country surveillance SGP: fiscal policy Competitiveness and Competitiveness imbalances and imbalances Structural reforms to raise growth potential Budgetary balances Public debt Long-term sustainability of public finances Budgetary rules and institutions Elements of quality of public finance Wages and price Wages competitiveness and price competitiveness External imbalances External imbalances Internal imbalances Internal (housing, credit) imbalances (housing, credit) Labour market reforms Product market reforms Reforms of social protection systems 5

6 EU recommendationsfor national action in 2013/14 Public finances Financial sector Structural reforms Employment and social policies AT BE BG CZ DE DK EE ES FI FR HU IT LT LU LV MT NL PL RO SE SI SK UK Sound public finances Pension and healthcare systems Fiscal framew ork Taxation Banking and access to finance Housing market Netw ork industries Competition in service sector Public administration and smart regulation R&D and innovation Resource efficiency Labour market participation Active labour market policy Wage setting mechanisms Labour market segmentation Education Poverty and social inclusion For Cyprus, Ireland, Greece and Portugal the only recommendation is to implement commitments under EU/IMF financial assistance programmes. Note: Recommendations proposed by the Commission in May 2013 for More information at:

7 Key messages A rebalancing of the EU economy is taking place, particularly in more vulnerable Member States, but also in stronger Member States wages and domestic demand are being allowed to rise Initial signs of improvement are visible, e.g. in the export performance of EL, IE, ES and PT and in rates of sovereign borrowing Reforms have been undertaken to improve the resilience and flexibility of the labour market but unemployment is still unacceptably high Fiscal consolidation has taken place and public finances are being brought back under control, but population ageing still represents a significant challenge for long term financial sustainability

8 Remaining challenges Member States with high levels of unemployment need to step up active labour market measures Member States need to do more to create the conditions for businesses to invest and create jobs. Remaining pockets of vulnerability in the banking sector must be tackled so that banks can start to channel funding back into the economy The crisis has had a lasting impact on the most disadvantaged people in society, and more attention should be paid to how reforms affect the least well-off

9 Differentiated, growth-friendly fiscal consolidation Public finances must be brought back on track to restore their sustainability The pace and composition of fiscal consolidation will be different for each Member State Negative impacts on growth in the short-term can be mitigated by appropriate measures in expenditure and revenue of public budgets Spending on areas of future growth potential and essential social needs should be prioritised Taxation should be shifted away from labour and towards areas that are less detrimental to growth

10 Restoring normal lending to the economy Work must continue on restoring the stability of the financial sector and improving financing conditions for the economy Bank lending to households and nonfinancial corporations, euro area Source: Commission Services At the EU level progress must be made with an integrated supervisory mechanism and legal framework for financial institutions Member States also have important roles to play in improving access to finance, including through promoting alternative sources of finance

11 Promoting growth and competitiveness Structural reforms must be reinforced to promote growth and competitiveness Important measures have been taken but more can still be achieved, for example by: - increasing investment in research and innovation - improving the business environment - raising educational standards - tapping the potential of the green economy - completing the single market, particularly in services - improving and liberalising network industries A lot can be learned from best practice in Member States and third countries

12 Unemployment and social consequences of the crisis An urgent response is needed, including through: - Improving employability by stepping up active labour market policies, e.g. skills upgrading, job-seeking assistance, support for entrepreneurship and mobility - Simplifying employment legislation - Developing flexible working arrangements - Ensuring wage developments support job creation - Improving connection between education, life-long learning systems and labour market needs Particular attention should be paid to the situation of young people Essential safety nets should be reinforced to prevent poverty and promote social inclusion

13 Modernising public administration Implementation of all measures depends on effective public administrations Progress is being made but more could be done to improve public procurement, the digitalisation of public administration, the quality and independence of judicial systems and the deployment of EU structural funds Government effectiveness (2010) Source: World Bank Worldwide Governance Indicators

Remarks at 5th SEEK Conference on Overcoming the Crisis: How to Foster Innovation and Entrepreneurship in a Diverging European Economy?

Remarks at 5th SEEK Conference on Overcoming the Crisis: How to Foster Innovation and Entrepreneurship in a Diverging European Economy? Peter Praet Member of the Executive Board 5 years ahead growth expectations