European semester spring package: the European Commission analyzed the current situation and provided guidance to member states in order to build a stronger and more resilient eu

Politics - June 13, 2023

The European Semester is a procedure that is followed by the European Union to coordinate economic policies and to ensure that Member States’ economic and fiscal policies are in line and consistent with each other. 

The European Semester follows several stages.
In November there is the presentation by the European Commission of the Annual Growth Survey, the Report on the Alert Mechanism for the Prevention of Macroeconomic Imbalances. The European Council prepares the Economic and Fiscal Policy Guidelines at the EU and member state’s level.
In February, the Commission usually publishes the Country Reports supplemented, for countries selected in the Alert Mechanism Report with macroeconomic imbalances, by the in-depth review.
Then, in mid-April, Member States submit National Reform Plans and Stability (NRP) and Programmes and Stability or Convergence programmes to the Commission and the Council, taking into account the guidelines dictated by the European Council.
In May, based on the above-mentioned NRPs and Convergence programmes, the European Commission prepares economic and fiscal policy recommendations addressed to individual member states.
Finally, in the second half of the year, Member States approve their respective budget laws, taking into account the recommendations received. Typically, by November, the European Commission proceeds to make an assessment of each state’s budget planning document.

For the year 2023, the European Commission presented the so-called Spring Package for the European Semester on last 24th May. In addition to country-specific reports and related recommendations, the Commission also adopted guidelines for employment policies in Member States.

The Spring Package that was presented by the EU Commission contains: a Communication, country reports and country-specific recommendations for all 27 Member States, in-depth reviews for 17 Member States, a Commission proposal on guidelines for Member States’ employment policies in 2023, a report under Article 126 (paragraph 3) of the Treaty, and post-programme surveillance reports for Ireland, Spain, Cyprus, Portugal, and Greece. 

This package intends to contribute to build an economy that is solid and fit to face the challenges of the future, which is also capable of making the European Union increasingly competitive and prosperous even though as of today we are experiencing a very complex and difficult geopolitical environment. For this reason, the European Commission calls on states to have an integrated approach in the different policy areas. To this end, therefore, it encourages the promotion of environmental sustainability, the promotion of productivity, the promotion of equity, and the promotion of macroeconomic stability.

The package shown by the European Commission revealed a situation in which the European economy continued to prove resilient even in a very difficult global scenario. In fact, there was moderate growth in the first quarter of 2023, which therefore dispelled fears of a recession. In this regard, the European economy is estimated to grow 1.0 percent in 2023 and 1.7 percent in 2024. Encouraging prospects, however, that must push all EU members to do their best in this field. 

The importance of this tool, which provides guidance to Member States on how to address economic and social challenges strategically, was also emphasized. The Commission has disbursed more than 152 billion euros in this field in order to make reforms and investments as effective as possible.

The Spring Package also contains country reports for the year 2023. These reports analyze the existing social and economic challenges in each member state, and also examine the extent to which they are provided for in national recovery and resilience plans. These recommendations will also help to realize the Green Deal business plan.

This type of specific recommendations has four different parts, consist on: a recommendation on fiscal policy including, where appropriate, structural fiscal reforms; a recommendation to continue or accelerate the implementation of the National Plan for Recovery and Resilience, including the review and integration of the REPowerEU chapter, taking into account potential country-specific implementation risks, and to rapidly implement adopted cohesion policy programs; an updated and more specific recommendation on energy policy in line with REPowerEU objectives; and an additional recommendation on existing and/or emerging structural challenges.

The EU Commission also made quantified and differentiated country-specific recommendations on fiscal policy. Specifically with regard to Member States that have reached their medium-term fiscal target, they are urged to maintain a sound fiscal position in 2024. In contrast, all other Member States are called upon to ensure prudent fiscal policy. In general, by the end of 2023, all member states should eliminate existing energy-related support measures. Finally, planned that for the period after 2024, Member States should continue to pursue a medium-term fiscal strategy of gradual and sustainable consolidation.

In terms of energetic issue, it was highlighted that there is a need to strengthen the green transition of European industries in order to reduce the EU’s overall dependence on fossil fuels and increase resilience to energy supply shocks. Therefore, action by member states should be aimed at shortening and simplifying permitting procedures and other systemic good governance measures. Removing regulatory barriers while ensuring good governance and respect for the rule of law, increasing institutional resilience, and improving the business environment is therefore a priority for accelerating the production and deployment of renewable energy and other zero-emission solutions.

In terms of employment policies, the Commission has set common and shared priorities so that social and employment policies implemented at the national level are more inclusive and just, continuing what has already been expressed in this regard in light of the post-covid era and the war between Russia and Ukraine. In addition to this, recalling the European Year of Skills, the importance of taking action to address skills and labor shortages was reiterated. Finally, the Commission emphasized the need to monitor progress towards achieving the EU’s 2030 headline targets, as well as, at the national level, addressing and finding answers in the areas of employment, skills and poverty reduction. In this regard, education and training systems are crucial and must therefore receive the right support.

In general, the European Commission decided to remember how the famous 17 Sustainable Development Goals (also known as SDGs) are fundamental within the EU and for its development, as they are also a benchmark in assessing achievements to date at the national and European levels.

Summarizing what was exposed so far, we can say that the Commission outlined the progress of the NRP, progress on previous European Semester recommendations, environmental sustainability, productivity, equity and macroeconomic stability. But not only. Indeed, the Spring Package represents a synthesis of what has been done so far at the individual level of the various member states, and proceeds to analyze especially the most relevant points for the entire European community, such as energy security, digitalization, education, employment, health, territorial inequalities, industry, taxation, debt sustainability and public administration. 

In the light of this analysis, therefore, the Commission outlined some steps to implement guidelines so that the European Union can grow and achieve those ambitious goals it has set for itself in a structural manner and in such a way that each member state is in line with the others, thus contributing to political and economic stability, with a view to improving conditions for all European citizens through a common and shared approach on the most important policies for the entire community.

From now on, it will be up to the Eurogroup and the European Council to proceed with the consideration and the subsequent approval of the guidelines proposed on last 24th May of the current year. It will also be crucial to proceed with a constructive dialogue with the European Parliament on the contents of this package and each subsequent step in the European Semester cycle.