All Member States have committed to achieving the Europe 2020 targets and have translated them into national targets. But only if the individual efforts of all countries are coordinated and focused, can they result in the desired impact on growth.
Therefore, the European Union has set up a yearly cycle of economic policy coordination called the European Semester. Each year, the Commission undertakes a detailed analysis of EU Member States' plans of budgetary, macroeconomic and structural reforms and provides them with recommendations for the next 12-18 months.
The European Semester starts when the Commission adopts its Annual Growth Survey, usually towards the end of the year. This document sets out EU priorities for the coming year to boost growth and job creation. The Commission simultaneously publishes its Alert Mechanism Report in the context of the Macroeconomic Imbalance Procedure. Based on a scoreboard of indicators, the Alert Mechanism Report identifies the Member States that require further analysis, in the form of an in-depth review, in order to conclude on the possible existence and the nature of potential imbalances.
In October, Member States submit their draft budgetary plans for the following year. The Commission issues an opinion on each of them in November. In particular, the Commission assesses whether the draft budgetary plans comply with the requirements under the Stability and Growth Pact.
Similarly, the Commission examines the economic partnership programmes submitted in October by those Member States subject to an Excessive Deficit Procedure. In these programmes the Member States concerned present the fiscal structural reforms supporting the correction of their deficits. On the basis of its assessment, the Commission issues proposals for Council opinions on the economic partnership programmes.
The Spring meeting of the European Council in March takes stock of the overall macroeconomic situation and progress towards the Europe 2020 targets and provides policy orientations covering fiscal, macroeconomic and structural reforms.
Also in March, the Commission publishes in-depth reviews for the Member States identified in the Alert Mechanism Report. These in-depth reviews can conclude that: (i) the country is not experiencing imbalances in the sense of the Macroeconomic Imbalance Procedure; or (ii) the country is experiencing imbalances, which are, however, not excessive; or (iii) the country is experiencing excessive imbalances.
In April, Member States present their plans for sound public finances (stability or convergence programmes) and their reforms and measures to make progress towards smart, sustainable and inclusive growth in areas such as employment, education, research, innovation, energy or social inclusion (national reform programmes).
In May-June, the Commission assesses these programmes and proposes country-specific recommendations as appropriate. These recommendations provide tailor-made policy advice to Member States in areas deemed as priorities for the next 12-18 months. The Council discusses and the European Council endorses the recommendations. Policy guidance is thus given to Member States before they start to finalise their draft budgets for the following year.
Finally, end of June or in early July, the Council formally adopts the country-specific recommendations.
Where recommendations are not acted on within the given time-frame, policy warnings can be issued. There is also the option of enforcement through incentives and sanctions in the case of excessive macroeconomic and budgetary imbalances.
To implement the required policies and to ensure wide ownership, close cooperation will be maintained with the European Parliament, EU advisory bodies (Committee of the Regions and European Economic and Social Committee) and the Member States, with the organisation of bilateral meetings between the national authorities and the Commission and with the full involvement of national parliaments, social partners, regions and other stakeholders.