European Semester Autumn Package: Questions and answers
What does today's package include?
Today, the Commission presents:
- Communication on the 2021 Draft Budgetary Plans (DBPs)
- Opinions on euro area Member States' DBPs
- Euro area recommendation 2021
- Alert Mechanism Report 2021
- Proposal for a Joint Employment Report 2021
- Communication on the fiscal situation in Romania
- Post-programme surveillance reports for Cyprus, Ireland, Spain, and Portugal
- Enhanced surveillance report for Greece
- Staff-working document on the implementation of the United Nations Sustainable Development Goals
How did the Commission assess the 2021 DBPs, given the activation of the general escape clause and the lack of any fiscal adjustment recommendations?
The Opinions on the 2021 DBPS take into account the activation of the general escape clause and the qualitative nature of the fiscal recommendations addressed by the Council to Member States in July 2020. The Opinions assess whether the measures contained in the DBPs are temporary and if not, whether offsetting measures are planned. Ensuring medium-term sustainability is a necessary condition for the departure from the normal budgetary requirements under the general escape clause.
The recommendation on the economic policy of the euro area
The euro area recommendation presents tailored advice to euro area Member State on those topics that affect the functioning of the euro area as a whole. The recommendation reviews fiscal, financial and structural issues, as well as institutional aspects of Europe's Economic and Monetary Union (EMU). This year the recommendation also provides policy guidance on the priorities that euro area Member States should pursue in their Recovery and Resilience Plans.
What is contained in the euro area recommendation?
In the context of the current crisis, the 2021 euro area recommendation focuses on short-term urgent priorities. Strong and coordinated action for the euro area is necessary to support the recovery and ensure the proper functioning of the EMU.
The recommendation places a strong emphasis on the use of the Recovery and Resilience Facility (RRF), the central pillar of NextGenerationEU, the EU's recovery instrument. The euro area recommendation intends to provide policy guidance on priorities that Member States should include in their Recovery and Resilience Plans (RRPs), outlining national investment and reform projects that will be supported by the RRF. They highlight areas where euro area Member States could work collectively to improve the economic and social resilience of the EMU. Such reforms and investment measures should create the right conditions for the recovery and should also effectively contribute to and accelerate the green and digital transitions.
The recommendation focuses on five policy areas, with a strong emphasis on reforms, economic resilience and macroeconomic linkages, namely to:
- Ensure a supportive aggregate fiscal and structural policy stance for the euro area;
- Further improve convergence, resilience and sustainable and inclusive growth;
- Address bottlenecks to investments and the efficient use of EU funds' in order to ensure effective utilisation of the RRF, which comprises improving the business environment;
- Maintain credit flows and sound bank balance sheets;
- Complete the EMU and strengthen the international role of the euro.
What are the next steps following the presentation of the 2021 euro area recommendation?
The current 2021 euro area recommendation is a “Recommendation for a Council Recommendation”. The Council will have to formally adopt the Recommendation, based on this Commission's proposal.
The Commission's proposal for the euro area recommendation will be presented at the Economic and Financial Affairs Council on 1 December 2020 and discussed by the Eurogroup on 16 December 2020. The endorsement by the European Council should take place in March 2021 and the adoption by the Economic and Financial Affairs Council on 18 May 2021.
Member States should take action based on the Recommendation both individually, including through their RRPs, and collectively within the Eurogroup, in the period 2021–2022 to implement the euro area recommendation.
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