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European Semester 2016: Commission publishes Country Reports
The European Commission has published its Country Reports as its annual analysis of the economic and social challenges in the EU Member States. The reports published on 26 February are a tool under the streamlined European Semester of economic policy coordination to monitor policy reforms and to point early on to challenges that Member States should address. Following the publication in November of the Annual Growth Survey 2016 and the euro area recommendation, which set out priorities at the European level, today's reports shift the focus of the European Semester to the national dimension. The reports will serve as the basis for discussion with Member States of their national policy choices ahead of their National Programmes in April, and will lead to the formulation in late spring of the Commission's Country-Specific Recommendations. For 18 Member States identified in the Alert Mechanism Report 2016 published in November alongside the Annual Growth Survey, the reports include the In-Depth Review under the Macroeconomic Imbalances Procedure.
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The Commission's analysis shows that reforms are being carried out on a number of policy areas, but the effort is uneven. A number of Member States still need to be more decisive in tackling persistent vulnerabilities, such as high public and private debt.
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Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue
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EU-Tunisia: Commission proposes further EUR 500 million in macro-financial assistance
Following a request by Tunisia, the Commission has proposed additional macro-financial assistance (MFA) to Tunisia of up to EUR 500 million. The assistance announced on 12 February would take the form of medium-term loans at favourable financing conditions. It is part of a wider effort by the EU to help Tunisia overcome the severe economic difficulties it has faced since its economic and political transition process began. Terrorist attacks in 2015 worsened the situation by affecting key economic sectors such as tourism and transport. This MFA programme complements the more than EUR 1 billion in EU development assistance that Tunisia has already received in the framework of the European Neighbourhood Policy through the European Neighbourhood Instrument (ENI) and other EU external financial instruments. It will help to cover Tunisia's external financing needs in 2016 and 2017, while supporting reforms designed to achieve a more sustainable balance of payments and budgetary situation, improve the investment climate, and foster economic integration and regulatory convergence with the EU.
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Eurobarometer: The role of the euro in international trade
The European Commission has published a Flash Eurobarometer on "Possible obstacles to using the euro in international trade" as perceived by companies in France, Germany, Italy and the UK in the aircraft and shipbuilding, energy, financial services, and electrical and mechanical engineering industries. The survey published on 23 February confirms that the euro is widely used by European firms in their invoicing practices with nearly eight out of ten companies invoicing more than 75% of their exports in euros. Two thirds of the surveyed firms in France, Germany and Italy said they did not use any currency other than the euro for export invoicing. If companies did use other currencies, this was mostly due to client preference and the important role of the US dollar in global finance. Moreover, four fifths of the companies said that the European sovereign debt crisis has had no effect on their use of the euro in trade invoicing. The Flash Eurobarometer survey was conducted to feed into the Commission report on "Invoicing currencies in international trade – Drivers and obstacles to the use of the euro".
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Commission guidelines help local authorities and project promoters combine EFSI and ESI funds
On 22 February, the Commission, in partnership with the European Investment Bank (EIB), published guidelines to help local authorities and project promoters make full use of the opportunities of combining European Structural and Investment (ESI) Funds with the European Fund for Strategic Investments (EFSI), the heart of the Investment Plan for Europe. The brochure provides an overview of the possible combinations of EFSI and ESI Funds, either at the project level or through a financial instrument such as an investment platform. In related news, on 22 February the European Investment Fund (EIF) and Compañía Española de Reafianzamiento (CERSA), a part of the Spanish Ministry of Industry, signed the first InnovFin and COSME counter-guarantee agreements in Spain. These transactions benefit from EFSI support and are expected to trigger nearly EUR 2 billion in fresh loans.
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Real Economy episodes analyses effectiveness of structural reforms with main guest Commissioner Pierre Moscovici
The latest episode of "Real Economy" explains structural reforms and examines their impact in Ireland. Structural reforms are meant to make an economy flexible and more resilient to shocks. In Ireland, for example, the government launched an action plan for jobs that helped provide training tailored to companies’ needs, attract foreign investment and boost export-oriented entrepreneurship. Despite the success of the plan, University College Dublin economist Aidan Regan believes that foreign direct investment – rather than structural reforms – underpins the Irish recovery. In contrast, European Commissioner for Economic and Financial Affairs Pierre Moscovici attributes Ireland’s success to both structural reforms and to the country being flexible. He said “we must also now invent reforms for the future, not only for the past” and emphasised that we must not fear reforms since they drive progress. Real Economy explains the complexities of economic matters in the EU to Euronews' daily audience of 6.5 million viewers. Besides watching it on TV, viewers can also follow it online - live or on demand.
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January 2016 Euro area unemployment rate at 10.3%; EU at 8.9%
According to figures published by Eurostat, the statistical office of the EU, the euro area seasonally-adjusted unemployment rate was 10.3% in January 2016, down from 10.4% in December 2015, and from 11.3% in January 2015. This is the lowest rate recorded in the euro area since August 2011. The EU unemployment rate was 8.9% in January 2016, down from 9.0% in December 2015, and from 9.8% in January 2015. This is the lowest rate recorded in the EU since May 2009. Among the Member States, the lowest unemployment rates in January 2016 were recorded in Germany (4.3%), the Czech Republic (4.5%), Malta and the United Kingdom (both 5.1%, November data for the UK). The highest unemployment rates were observed in Greece (24.6% in November 2015) and Spain (20.5%). Compared with a year ago, the unemployment rate in January 2016 fell in 24twenty-four Member States, remained stable in Estonia and increased in Latvia (from 9.7% to 10.4%), Austria (from 5.5% to 5.9%) and Finland (from 9.1% to 9.4%). The largest decreases were registered in Spain (from 23.4% to 20.5%), Slovakia (from 12.3% to 10.3%), Ireland (from 10.1% to 8.6%) and Portugal (from 13.7% to 12.2%).
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Compared performances of French companies on the domestic and foreign markets. Discussion Paper 24/2016.
In France, the balance of trade has deteriorated almost continuously from the late 1990s to the early 2010s. While many studies have focused on losses in export market share, this paper examines the performance of French companies on the domestic market. The export performance of French companies has declined fairly sharply, but their loss of market share has been smaller on the domestic market. At the firm level, a company’s export performance and domestic market performance have a slight tendency to move in opposite directions. The analysis shows, however, that increased demand in the domestic market results in a rise in domestic sales, which then leads to an increase in exports. This complementarity seems to be driven by small companies and could reflect the existence of liquidity constraints. Increased sales in one market could lessen these constraints, by facilitating funding for company development in the second market. Strong domestic demand during the pre-crisis period in France is therefore not an explanatory factor of losses in export market share.
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The importance of intangible investment
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Directorate-General for Economic and Financial Affairs
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