Strasbourg, 07/06/2011 (Agence Europe) - On Tuesday 7 June, the European Commission published its recommendations for member states' Stability and Growth Programmes and National Reform Programmes, which were submitted by the member states at the end of April as part of the new European semester (see EUROPE 10289). The Commission believes the submitted programmes are a good starting point for stimulating economic recovery in Europe, solving budget issues and engaging in more ambitious structural reforms. The Commission says, however, that it is concerned that the total commitments will not enable the EU to meet its big targets for 2010 and although progress is being made towards the greenhouse gas emissions targets, renewable energy and reducing school drop-out rates, the EU will have to pull its socks up if it is to meet its employment, R&D, energy efficiency, higher education and poverty reduction targets.
The Commission's recommendations are part of the EU response to the economic crisis and the eurozone sovereign debt conundrum because EU economies now depend on one another more than ever before, explained the president of the European Commission, José Manuel Durão Barroso. He said this required closer cooperation and more effective economic and budget policy coordination. Barroso said the Commission's recommendations were objective, based on information provided by the member states and matched the challenges facing each country individually. The recommendations are also quantifiable, he said, because they include tangible measures to be introduced over the next 12 -18 months. Pointing out that the national programmes are based on the Annual Growth Review made by the Commission at the start of the year, Barroso said that they did not aim high enough when it came to budget consolidation and the documents supplied by the member states were rather vague at times. The areas where Barroso said member states needed to make a greater effort are the environment, company law, growth stimulation and getting more young people, women and elderly people into work.
EU Economic and Monetary Affairs Commissioner Olli Rehn said the member states fell into three categories - those bailed out by the EU and the IMF (Greece, Ireland and Portugal in the eurozone along with Latvia and Romania), which need to focus on the structural adjustment programmes they are implementing in exchange for financial aid. The next group comprises highly indebted, not very competitive countries, which needed to correct their public finances and become more competitive by linking pay with increases in economic growth and productivity. Rehn said the third group of countries had excess current accounts and low levels of public debt and should deal with longer-term problems like the ageing population. Germany, for example, should introduce its budget strategy and find ways of tackling the weaknesses of its banks, he said, by restructuring regional building societies (“Landesbanken”). In addition to the country-specific recommendations, the Commission has also examined the impact of the national measures on the eurozone.
The Hungarian Presidency said it would be arranging talks at the Council of Ministers about the Commission's recommendations in preparation for the publication of guidelines by the European Council in June. “The Hungarian Presidency is also aware that fiscal consolidation is necessary but not sufficient in tackling the significant economic challenges ahead of us. Policies aiming at promoting growth and addressing macroeconomic imbalances should go hand in hand with fiscal discipline”, it explains in a press release.
What will be done if a member state ignores the recommendations? Rehn said the Commission's proposals were to be submitted to the Council of Ministers, which was responsible for getting them adopted, meaning that they may be changed. The commissioner hoped that if countries strayed from the recommendations, then the other member states would put pressure on them to explain themselves.
Timing. The European Council in June needs to endorse the country-by-country recommendations before the ECOFIN Council in July formally adopts them. At the end of the European semester, a “national semester” will start in which member states are to incorporate the recommendations into their draft budget for 2012 and their Structural Reform Programmes. The Commission says it will closely monitor implementation of the recommendations by the member states and will make its first analysis as part of its Annual Growth Review in January 2012, an analysis that will be fine-tuned in the next batch of country-specific recommendations (to be unveiled in June 2012). (M.B.transl.fl)