The Commission's 2013 recommendations for the United Kingdom in brief
The Commission has issued six country specific recommendations (CSRs) to the UK to help it improve its economic performance. These are in the areas of:
Sustainable public finances
The UK has very high levels of government debt and a large fiscal deficit. To get public finances back on a sustainable footing, the UK should continue to prioritise the reduction of its debt and deficit, whilst balancing this with targeted growth-enhancing expenditure.
The housing market
The level of household debt in the UK is well above the euro area average. A housing shortage and lack of residential construction is also contributing to keeping house prices high. The UK should take measures to increase the housing supply and strengthen the rental market, whilst avoiding a return to imprudent mortgage lending.
Youth unemployment is over 2.5 times greater than the overall unemployment rate in the UK. The UK should improve the quality of vocational training on offer and reduce the number of young people without sufficient skills to enter the labour market.
Support to low income households
The UK has the second highest percentage of people living in households with a very low work intensity in the EU. The UK should ensure its tax-benefit system is both fair and offers clear work incentives. To allow more women, who wish to, to take up full-time work, the UK should improve the affordability and quality of childcare provision.
Access to finance for businesses
The UK is one of the most difficult countries in the EU for businesses to obtain bank credit, according to SMEs. The UK should take measures to encourage banks to lend to businesses, whilst avoiding excessive risk taking.
Investment in infrastructure
The UK needs to invest in its energy and transport infrastructure if it is to continue to meet the needs of the rest of the economy over the coming decade. In terms of contribution from renewable energy sources the UK is ranked 25th out of the 27 Member States in the EU and should make significant improvements when upgrading its energy infrastructure. With regard to transport, there is a significant gap between the investment needed to improve transport infrastructure and finances committed. The UK should look to provide greater certainty in investment from both public and private sources.
Apart from the UK specific aspects, a number of key EU-wide messages have emerged from this round of country-specific recommendations (CSRs). The Commission's analysis shows that rebalancing is underway in the EU. Most Member States are making progress on fiscal consolidation and are implementing reforms to increase competitiveness. However, the pace and impact of these efforts varies. Some Member States need to accelerate reforms or to implement them with greater urgency.
A major challenge is to tackle rising unemployment, especially youth unemployment, by increasing the use of active labour market policies or by reforming education and training systems to make sure jobseekers are equipped with the right skills for the jobs we have. More can also be done to create the conditions for businesses to invest and create jobs, including by improving competition in product and service markets and promoting investment in research, innovation and resource efficiency. Moreover, fiscal consolidation should continue, albeit at a different pace, while remaining pockets of vulnerability in the banking sector need to be addressed.
The package includes:
A Communication outlining the main findings of the Commission's country by country analysis, and how this can boost growth and job creation in the EU as a whole.
24 sets of recommendations, one set for every Member State - excluding Greece, Ireland, Portugal and Cyprus,- and a separate set for the euro area as a whole. The recommendations contain country-specific guidance on budgetary, economic and social policies, taking account of the individual situation of each Member State.
Detailed analyses underpinning the recommendations, presented in 29 staff working documents (one for every EU Member State, one for the euro area and one for Croatia).
In parallel with the European Semester recommendations, the Commission has also adopted a number of recommendations under the Excessive Deficit Procedure, reflecting the latest developments in Member States that already have or are expected to bring their government deficit below the EU's 3% of GDP threshold in future. (1)
1. The 2013 country-specific recommendations (see MEMO/13/458)
The CSRs offer bespoke policy advice that guides national policies every year. This is done on the basis of a review of each Member State's economic and social performance in the previous year, and EU-wide priorities for jobs and growth set out in the Commission's Annual Growth Survey (MEMO/12/910).
In March, Member States agreed on the five priorities proposed by the Commission for 2013: pursuing differentiated growth-friendly fiscal consolidation, restoring normal lending to the economy, promoting growth and competitiveness, tackling unemployment and the social consequences of the crisis and modernising public administration.
The recommendations are drafted by the Commission services and adopted by the College of Commissioners. They are drafted after a thorough assessment of the implementation of last year's country-specific recommendations, combined with a detailed analysis of the national reform programmes and stability or convergence programmes(2) that Member States submitted in April. This analysis is set out in staff working documents accompanying the proposals.
The recommendations cover a wide range of issues, including public finances and structural reforms in areas such as taxation, pensions, public administration, services, and the labour market, especially youth unemployment. The programme countries (Greece, Portugal, Ireland and Cyprus) do not receive CSRs as their compliance with their macroeconomic adjustment programmes is monitored under a separate, more intensive, process.
For an overview of the recommendations by country, please see below.
2. Decisions under the Excessive Deficit Procedure (see MEMO/13/463)
The Commission has today recommended that the Council abrogate the Excessive Deficit Procedure (EDP) for five countries: Hungary, Italy, Latvia, Lithuania and Romania.
The Commission has also recommended that the Council open an EDP for Malta.
Moreover, the Commission has adopted Recommendations to the Council with a view to extend the deadlines for correcting the excessive deficit in six countries: Spain, France, the Netherlands, Poland, Portugal and Slovenia.
In addition, the Commission has recommended that the Council decides that no effective action has been taken by Belgium to put an end to the excessive deficit and that the Council gives notice to Belgium to take measures to correct the excessive deficit.
For further information:
The UK Country Specific Recommendations in full:
See how the United Kingdom compares with other EU Member States in key areas
All EU member country-specific recommendations:
Excessive Deficit Procedure:
MEMO/13/458 2013 Country-specific recommendations: frequently asked questions
MEMO/13/463 Commission takes steps under the Excessive Deficit Procedure
Pia Ahrenkilde Hansen (+32 2 295 30 70)
Olivier Bailly (+32 2 296 87 17)
Sarah Collins (+32 2 296 80 76)
Simon O'Connor (+32 2 296 73 59)
Vandna Kalia (+32 2 299 58 24)
Audrey Augier (+32 2 297 16 07)
For more information, please contact the London press office on 020 7973 1971.
Please note: all amounts expressed in sterling are for information purposes only.
(1 ) Hungary, Italy, Latvia, Lithuania, Romania, Malta have done so already. Spain, France, the Netherlands, Poland, Portugal, Slovenia and Belgium are expected to in future.
( 2) Stability programmes are submitted by euro area Member States, convergence programmes by non-euro area Member States. They set out the plans for sustainable public finances. National reform programmes present key policy measures to enhance growth and job creation and reach the Europe 2020 targets.