The European Semester represents a yearly cycle of EU economic policy guidance and country-specific surveillance. Each year the European Commission undertakes a detailed analysis of EU Member States' programmes of economic and structural reforms and provides them with recommendations for the next 12-18 months.
In the past, the EU institutions discussed economic policies in the spring and examined fiscal policies and developments separately in the autumn. But in 2010, a new approach towards economic surveillance and a new policy-making timetable was agreed. The aim is to ensure that all policies are analysed and assessed together and that policy areas which previously were not systematically covered by economic surveillance – such as macroeconomic imbalance and financial sector issues – are included.
The new approach was put into practice for the first time during the first half of 2011, the first 'European semester'. EU-level discussions on fiscal policy, macroeconomic imbalances, financial sector issues, and growth-enhancing structural reforms will now always take place jointly during the European semester and before governments draw up their draft budgets and submit them to national parliamentary debate in the second half of the year (the 'national semester').
This 'upstream' policy coordination should make the implementation of policy guidance more effective and help embed the EU dimension in national policy-making. The annual cycle begins with the Commission's Annual Growth Survey, which gives broad guidance on priority actions to be taken at EU and national level. Member States then submit Stability or Convergence Programmes on their fiscal plans and National Reform Programmes on structural reforms and measures to boost growth and jobs.
The Commission assesses these reports based on an integrated analysis covering fiscal, macroeconomic, and structural policies and on that basis proposes concrete policy recommendations for each country. The June European Council discusses the recommendations and the Council adopts them.
For the euro area, an additional European discussion takes place during the national semester, to discuss Commission's opinions on the Member States' draft budgetary plans and the fiscal stance in the Eurozone as a whole.
The EU's economic governance explained (European Commission - MEMO/13/979, 12 Nov 2013)