Today, the Commission presented to the ECOFIN Council the Country Reports it published on 26 February as part of the new streamlined European Semester of economic policy coordination. The Council had a first exchange of views on the reports, which analyse Member States' economic policies. It will return to these discussions in May. The Council also adopted the Commission's proposal for a Council recommendation to France, setting a new deadline for France to correct its excessive deficit and bring it below 3% by 2017.
This will require an improvement in the structural fiscal balance of 0.5% of GDP in 2015, 0.8% of GDP in 2016 and 0.9% of GDP in 2017.
The recommendation includes strict milestones for the fiscal adjustment path that will be assessed regularly by the Commission and by the Council.
European Semester: Country Reports
The Country Reports analyse the economic situation, challenges and implementation of key policies of each Member State (except for Greece, for which a report will be made at a later stage). 16 Member States were identified in November as meriting further analysis on possible macroeconomic imbalances. The reports include in-depth reviews on Belgium, Bulgaria, Croatia, Finland, France, Germany, Hungary, Ireland, Italy, Netherlands, Portugal, Romania, Slovenia, Spain, Sweden and the United Kingdom. The package also includes a report on the economic situation in the euro area as a whole.
The reports are an innovation in the European Semester process. In the past, they took the form of staff working documents submitted by the Commission in May or June to accompany its draft Country-Specific Recommendations. Advancing the publication by three months is meant to allow more time for discussion with the Member States and other stakeholders at all levels ahead of the presentation of national programmes and finalisation of Country-Specific Recommendations.
Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue, said: "The Commission analysis shows that thanks to strong reforms efforts, many Member States are correcting past imbalances, and therefore enhancing their growth potential and generating employment. Other Member States are lagging behind. To reverse this trend, responsible fiscal policies need to be pursued and structural reforms stepped up where necessary."
Member States adopt Commission proposal for a Council Recommendation to France
The text of the Council recommendation to France on its fiscal deficit is fully in line with the text put forward by the Commission on February 27. France now has to follow up the recommendation in order to achieve the targets set for 2015, 2016 and 2017. The first occasion to review the progress made will be in spring, based on France's Stability Programme expected by mid-April. The Commission will then assess France's fiscal strategy to achieve the fiscal targets set and the additional structural discretionary measures representing 0.2% of GDP required to achieve a fiscal effort of 0.5% of GDP for 2015.
Commissioner Pierre Moscovici, responsible for Economic and Financial Affairs, Taxation and Customs, said: “The fiscal adjustment path set for France in the Council Recommendation is a demanding one and the Commission will be extremely vigilant in monitoring its implementation. Not only because it is a question of credibility of the Stability and Growth Pact, but also because France has to reform and to consolidate its public finances for its own sake. The Commission’s approach is to ensure fiscal responsibility while encouraging structural reform and productive investment, in the interest of delivering sustainable jobs and growth."
The Commission will also reassess in spring whether France has made tangible progress on structural reforms. This will be checked against the level of ambition of the French National Reform Programme, also expected for mid-April, and other commitments presented by that date.
Next steps in the 2015 European Semester
This month, the European Commission will organise another round of bilateral meetings with the Member States to provide an opportunity to discuss the Country Reports.
By mid-April, Member States are expected to present their National Reform Programmes (setting out structural reform priorities) and Stability or Convergence Programmes (medium-term fiscal plans for euro/non-euro area Member States, respectively).
Based on these sources, the Commission will present a new, focussed set of Country-Specific Recommendations for 2015-2016 in May, targeting the most important challenges to be tackled. The European Council in the end of June will discuss this new package. The 2015 European Semester will be concluded in July with the formal adoption of the Country-Specific recommendations by the Council.