EU Member States are making progress in addressing imbalances in their economies.
They have also advanced in carrying out the country-specific recommendations issued last year, although to varying degrees across countries and policy areas. These efforts are key in strengthening the European recovery and fostering convergence. They also reflect the focus of this year’s European Semester: re-launching investment, implementing structural reforms and pursuing responsible fiscal policies.
The Commission decided last November that 18 Member States merited in-depth reviews to assess whether they were experiencing macroeconomic imbalances, and if so, how serious these imbalances were. Of these countries, the Commission has concluded that six are not experiencing imbalances in the framework of the macroeconomic imbalances procedure. Twelve are experiencing either imbalances or excessive imbalances.
As anticipated in the October 2015 Communication on steps towards completing the Economic and Monetary Union, the Commission has made the implementation of the macroeconomic imbalances procedure (MIP) clearer and more transparent by reducing the number of categories for imbalances from six to four: no imbalances, imbalances, excessive imbalances andexcessive imbalances with corrective action (excessive imbalances procedure).
From now on, all Member States that are found to have imbalances or excessive imbalances will be subject to specific monitoring adapted to the degree and nature of the imbalances. This will enhance the surveillance of Member States’ policy responses through an intensified dialogue with the national authorities, through missions and through progress reports. The chart in the annex below displays the categorisations as of 2016.
Bulgaria, Croatia, France, Italy and Portugal are found to be experiencing excessive imbalances.
Finland, Germany, Ireland, the Netherlands, Spain, Sweden and Slovenia are found to be experiencing imbalances.
Austria and Estonia, which had in-depth reviews for the first time this year, are deemed not to be experiencing imbalances. Belgium, Hungary, Romania and the United Kingdom are found not to be experiencing imbalances.
Next Steps
The Council is expected to discuss the Commission’s findings emerging from the in-depth reviews carried out for 18 Member States’ economies.
In March and April, the Commission will hold further bilateral meetings with the Member States. These meetings will provide an opportunity to discuss the country reports with the national authorities.
In April, Member States are expected to present their national reform programmes and their stability programmes (for euro area countries) or convergence programmes (for non-euro area countries).
Based on all these sources, the Commission will present in spring its proposals for a new set of country-specific recommendations, targeting the key challenges to be addressed. The recommendations will also include fiscal guidance and be based on the Commission Spring Forecast which will incorporate final 2015 budgetary data validated by Eurostat.
Greece and Cyprus, which are currently under stability support programmes, are not covered by today’s package.
Background
The early publication of these country reports is part of the efforts to streamline and strengthen the European Semester, in line with the Five Presidents’ Report and the steps announced by the Commission to complete Europe’s Economic and Monetary Union. Some of these steps were initiated last year, and the practice is confirmed this year, in order to allow for a real dialogue on European priorities, including euro area challenges, upfront at the start of the European Semester, and then to give more time for dialogue with Member States and stakeholders at all levels to reflect on their priorities. These reports also reflect the greater focus on employment and social considerations which the Commission is bringing into the European Semester.
FURTHER INFORMATION
The start of the 2016 European Semester: The November European Semester package explained
