Brussels, 23/11/2011 (Agence Europe) - On Wednesday 23 November, the European Commission unveiled its Annual Growth Review for 2012, which kicks off the second European Economic Governance Semester and sets out what the Commission sees as the priorities for the EU over the next 12 months for budget policies and structural reforms. It contains a list of current or future projects to stimulate growth which the Commission wants to see implemented more rapidly throughout the EU legislative process. It is being unveiled in November rather than January to allow member states and EU institutions sufficient time to examine it properly. The European Council of 9 December 2011 will take note of it, but the Annual Growth Review for 2012 is in fact the European Commission's main contribution to the Spring European Council (1-2 March 2012).
National reform programmes (structural reforms) and stability and convergence programmes (budget policies) to be submitted by the member states in April and May next year, and the new or updated country-specific recommendations that the Commission will be unveiling in June, must match the policy priorities set out in the Annual Growth Review. For the first time, the six-pack of new surveillance rules will be used during the European Semester.
The key message of the Annual Growth Review for 2012 is that faced with the economic and social slowdown, work must be intensified to get Europe back on tract and support jobs and growth.
The Review says that the EU and its member states should focus on five priorities:
“Government debt levels have increased markedly - by 20 percentage points on average over 2007-2010 as a result of the crisis - and are expected to reach 85% of GDP in the EU and 90% in the euro area by 2012”, explains the Commission. “Significant steps have been taken to consolidate public finances, and public deficits are set to decline to just above 3% of GDP on average in the EU in 2013.” José Manuel Barroso, the president of the Commission, added that countries were being asked to reform tax systems to make them more conducive to growth and employment. 2) Returning to normal lending to the real economy, “which means pursuing the repair and reform of the banking sector, facilitating investment in SMEs and encouraging venture capital”. 3) “Stepping up structural reforms, particularly in the area of services, network industries, the public sector and the digital economy.” Three countries have yet to implement the Services Directive, for example. 4) “Removing rigidities in the labour market and characteristics in welfare systems which have the perverse effect of perpetuating unemployment and reinforcing poverty”, said Barroso. 5) Modernising the civil service across the board to facilitate investment and job creation.
“I will not claim that all of this is new - unfortunately it is not! Because what we need most of all is not an array of new ideas, but a serious, urgent, consistent drive to implement commitments already made.”
“We welcome the Annual Growth Survey for 2012 that launches the 2012 European semester of economic governance, we share the Commission analysis and we encourage member states to undertake growth enhancing structural reforms with more determination particularly in the areas of competition, services and network industries”, said Joseph Daul and Jean-Paul Gauzès on behalf of the EPP Group at the European Parliament.
Taxation. “Tax policy is fundamental for economic recovery. Moreover, the quality of taxation will determine whether we sink or swim”, said EU Taxation Commissioner Algirdas Šemeta, adding that tax reform goes hand-in-hand with structural reform. He recommended that countries should find new sources of revenue to consolidate their budgets and solve the crisis. “But using arbitrary tax rate hikes as the only solution is neither sustainable nor smart. Member states, instead, should first look at how they can improve the systems already in place. Can they broaden tax bases and close tax gaps? As a first step, they should focus on tax breaks, and whether they are really necessary or fair. Company cars currently enjoy favourable tax arrangements in 18 member states, to the total cost of €54 billion. That equates to 0.5% of the annual GDP of these countries. Is this clever taxation, particularly when we consider the environmental impact?” Semeta defended his idea of a financial transaction tax and also recommended a healthier business environment for companies and said: “It is time to step up the battle against tax evaders, and against the countries that harbour them.”
Employment/social. EU Employment and Social Affairs Commissioner Laszlo Andor said action was needed to tackle youth unemployment: “Over the past three years, youth unemployment has risen sharply from 15% to 21%.” New businesses start-ups needed to be looked into, along with increased mobility. Labour market reforms were needed in some countries where rigid rules had fragmented the jobs market. Andor said that pay needed to be looked at as part of the economic governance measures. He welcomed the talks in Germany about possibly introducing a minimum wage and said the Commission would be announcing new measures next year to tackle pensions.