The European Semester has become a key element in the EU’s efforts to promote effective economic governance through EU-level mutual monitoring and benchmarking. In this Report we consider 26 documents directly or indirectly relevant to the opening stage of the 2017 European Semester, some of which we are recommending for debate in European Committee B. The efficacy of the European Semester process is important to the UK for the following reasons: a) the economic health of a major trading partner will always be a key UK interest; b) it provides assessments of the economic health of individual countries and the EU as a whole; and c) it gives an external assessment of the UK’s own economic health to add to other assessments such as those of the IMF and the OECD. A debate would enable Members to consider what value the European Semester process is having for the EU generally, the eurozone and the UK. They might also wish to explore how the UK might continue to influence efforts to ensure the economic health of the EU, which will remain a major trading partner after Brexit. In 2010 the EU created an additional instrument for preventive surveillance of the economic and fiscal policies of Member States — the European Semester, an annual cycle of economic policy coordination. It is an EU-level framework for coordinating and assessing Member States’ structural reforms and fiscal/budgetary policy and for monitoring and addressing macroeconomic imbalances. It attempts to align their reporting cycles for the various programmes, so tying together consideration of National Reform Programmes and Stability and Convergence Programmes. Elements of the cycle focus particularly on the eurozone and its Member States. The first annual cycle was in 2011. In autumn 2011 a Macroeconomic Imbalance Procedure was introduced as part of the response to the economic and financial crisis. Its processes are a slightly separate part of the European Semester and it is designed to prevent and correct risky macroeconomic developments, such as high current account deficits, unsustainable external indebtedness and housing bubbles. The procedure aims to reinforce the monitoring and surveillance of macroeconomic policies in the EU, particularly in relation to the eurozone. The first step of the annual cycle is the Commission’s Alert Mechanism Report, published at the same time as the Annual Growth Survey. The report is based on a scoreboard of economic indicators and the Commission identifies the Member States and issues which require In-Depth Reviews for further economic analysis. The In-Depth Reviews are published in the following spring. In the case of Member States where an imbalance exists, but is not of an excessive nature, the follow-up to the In-Depth Review will take place under the preventive arm of the Macroeconomic Imbalance Procedure. This means that a relevant recommendation would be integrated in the package of proposals for Country Specific Recommendations, in the Semester process. If the Commission in its In-Depth Review were to find existence of an excessive imbalance, this might trigger an Excessive Imbalance Procedure under the corrective arm of the Macroeconomic Imbalance Procedure. In a case where an excessive imbalance was deemed to be jeopardising the proper functioning of the Economic and Monetary Union the Commission could recommend that the Council initiate the Excessive Imbalance Procedure. The Member State would have to submit a “corrective action plan” to the Council and Commission. Surveillance would subsequently be stepped up by the Commission through regular progress reports from the Member State concerned. Enforcement of the Excessive Imbalance Procedure is backed by sanctions for eurozone Member States (up to 0.1% of GDP), if they repeatedly fail to take agreed action or to deliver a sufficient “corrective action plan”. (This provision has not yet be used against any Member State.)
European Parliament
