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European Commission - Speech - [Check Against Delivery]

Remarks by Vice-President Dombrovskis on the Spring 2016 European Semester package

Brussels, 18 May 2016

Today, the College has adopted the Spring economic package.

Let me first of all thank all Commission staff members who have contributed to it, who have worked very hard, during long weeks, analysing data and documents, engaging with governments at technical level to shape Country-Specific Recommendations and prepare the ground for the College to take the eventual decisions.

The Spring package is a key step in the European Semester, guiding Member States' actions over the next 12 to 18 months. Today's package is also the next step in our efforts to make the Semester more effective, with fewer recommendations and hence a more focused approach.

What we really need is focus: supportive financing conditions can never be taken for granted, and external risks are increasing. For Europe to grow under such circumstances, we have only ourselves to depend on. So we have to stay the course. This means: redouble our efforts on implementing structural reforms, modernise our economies, and attract more investment.

Today's package covers the main reform proposals for 27 countries, as well as fiscal decisions for several Member States. As you know the only exception is Greece, which is still under a programme. It also includes letters to 19 Member States with questions on implementation of the Fiscal Compact into their national law.

So what is the overall picture regarding Country-Specific Recommendations?

First, attracting investment means creating an environment that facilitates investment and provides the boost in confidence our economies need. Various aspects of how to improve the investment climate in different countries are noted throughout the package. Of course we still work in a situation where the legacy of the crisis is still quite heavy.

Second, if we are serious about unlocking the growth potential in Europe, we need to continue to address long-standing weaknesses of Europe's economies. Shifts in the global economy and new developments in technology will not wait for Europe to get its act together.

This is why we need to modernise our economies. Countries that have implemented ambitious reform programmes over the last couple of years, such as Ireland, Spain, Portugal and the Baltic States are now catching up, with some of them even marking the highest growth rates in Europe. This translates in new jobs, less poverty and less social exclusion.    

So we need substantial progress on key structural reforms across the board - more progress than we have been making so far. Our current assessment is that countries have made between 'limited' and 'some progress' in their implementation. Even if many Member States have taken impressive steps to reform their economies, on average the implementation level of reforms is not satisfactory. It is clear that some Member States faces greater challenges than others, and this is reflected in the policy advice in the Country-Specific Recommendations.

The main areas of reform, at this point in time, are the following:

  • supporting public and private investment, and removing barriers where necessary;
  • further strengthening our banking systems, as well as dealing with Non-Performing Loans;
  • continued reform of our labour markets, and product and services markets;
  • improving the business environment and increasing productivity, also through modernising our public administrations;
  • reforms to make pension, health and social systems sustainable, while ensuring both their quality and their cost-effectiveness.
  • and better tax policies. Efforts to make tax systems fairer, more transparent and more conducive to jobs and investment creation are vital. We need to step up the fight against tax avoidance and evasion, both at the national level and by improving the EU framework.

An intensified dialogue with governments, national parliaments, social partners and stakeholders has helped us to identify the most significant reforms as well as the most important barriers to reform and to investment.

There is also a stronger emphasis on the social and employment dimensions of reforms, on which Marianne will brief you more extensively later.

The result is a realistic and broad-based package, with which the agenda for structural reform is put sharply in focus.

The third element of the package is fiscal policy.

Overall, the aggregate deficit level in the euro area is set to fall to 1.9% this year, down from the peak of 6.1% in 2010. The fiscal stance in the euro area is expected to become slightly expansionary this year. However, adjustment efforts are still needed in a number of countries, especially in those with high debt levels, which are a drag on growth and a persistent vulnerability.

I will now pass floor to Pierre for country-specific information.


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