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.
Portugal's economic recovery is firming, with output expanding since the spring of last year. Unemployment is receding and the external balance is improving. In line with output, employment started to grow from early 2013 while unemployment showed a steady decline. Robust export performance contributed decisively to the strong improvement in Portugal's external balance, which turned into a surplus in 2013. Portugal is recommended to correct its excessive deficit by 2015 at the latest.
Portugal successfully concluded its macroeconomic adjustment programme on 17 May 2014, with the bulk of the planned consolidation and reform measures being completed. In the context of the programme, Portugal was recommended to adhere to the terms of the Memorandum of Understanding in 2013 and did not receive additional country-specific recommendations. Significant fiscal consolidation has been achieved over the three-year programme period, financial stability risks have been carefully managed and the banking system's ability to extend credit to viable enterprises has been safeguarded, and major structural reforms have been implemented.
Nevertheless, significant challenges remain, and the authorities will need to continue to engage in fiscal consolidation to put public finances on a sustainable footing and tackle unemployment, in particular among the young and older workers. To ensure the effectiveness of fiscal consolidation efforts, expenditure restraint needs to be maintained at all levels of government. A comprehensive strategy to reduce the large corporate debt overhang needs to be implemented swiftly. In addition, significant structural reforms are still needed, for instance to further reduce excessive costs in the energy sector and in ports and to lower the administrative and licensing barriers to doing business. See how Portugal compares with other EU Member States in key areas.
2014 European Commission's recommendations in brief
The Commission has issued eight country-specific recommendations to Portugal to help it improve its economic performance. These are in the areas of: public finances; fiscal structural reforms; labour market and social inclusion; education and training; financial sector; network industries; administrative burden; evaluation of reforms.