The country-specific recommendations are documents prepared by the European Commission for each Member State, which analyse its economic situation and provide tailored policy advice on measures that it should adopt over the coming 18 months. They cover the particular challenges that the Member State is facing in a broad range of areas: the state of public finances, reforms of pension systems, measures to create jobs and to fight unemployment, education and innovation challenges, efficiency of the public administration, competition etc. The final adoption of country-specific recommendations prepared by the Commission takes place at the highest level by national leaders in the European Council.
Domestic demand amid sound fundamentals remains the driver of the solid expansion of the German economy. Unemployment continues to be low and decreasing, while domestic price pressures remain in place. As highlighted in the 2014 in-depth review presented by the Commission on 5 March 2014, Germany is experiencing macroeconomic imbalances, which require monitoring and policy action. The size and persistence of the current account surplus deserve close attention.
The new federal government is introducing a number of reforms but overall, Germany has made limited progress in addressing the 2013 country specific recommendations. Germany has maintained a sound fiscal position. It has also made progress in implementing the debt brake across Länder, in increasing the availability of child care facilities and in implementing the competition law. Major reforms were recently adopted or are expected in the area of pensions, energy and regarding the introduction of a minimum wage.
Despite the current overall favourable economic situation, Germany faces important challenges, especially in the medium and long term, but its policy plans for 2014 do not go far enough in some areas to address them. To stimulate domestic sources of growth and increase potential growth, Germany needs to enhance the growth-friendliness of its public finances and the efficiency of the tax system, raise labour supply and human capital, deal with the challenges posed by the transformation of the energy system (Energiewende), raise investment and productivity, and reduce barriers to competition, particularly in the services, railway and banking sectors. See how Germany compares with other EU Member States in key areas.
2014 European Commission's recommendations in brief
The Commission has issued four country-specific recommendations to Germany to help it improve its economic performance. These are in the areas of: public finances; labour market; energy; competition in the services sector.