Economy and finance statistics introduced
Latest update of text: June 2017
Planned article update: October 2018
The European Union (EU) is active in a wide range of policy areas, but the economic domain has traditionally played a prominent role. Starting from the rather narrow focus of introducing common policies for coal and steel, atomic energy and agriculture as well as the creation of a customs union over 50 years ago, European economic policies progressively extended their scope to cover a multitude of domains: two of the major milestones being the establishment of a single market as of 1 January 1993 and the introduction of a single currency, the euro, launched on 1 January 2002.
In order to support policy developments a broad range of short-term and structural indicators are required. Eurostat data from a variety of different sources, such as national accounts, government finance statistics, exchange rates and interest rates, consumer prices, and the balance of payments, may be used to support analysis of the economic situation. These indicators are also used in the design, implementation and monitoring of the EU’s policies.
Since the end of 1992, the European single market has enhanced the possibilities for people, goods, services and money to move around the EU as freely as within a single country. In April 2011, leading up to the 20th anniversary of the beginning of the single market, the European Commission released a Communication Single Market Act — twelve levers to boost growth and strengthen confidence (COM(2011) 206 final), aimed at improving the single market for businesses, workers and consumers. In October 2012, this was supported by a further Communication from the European Commission Single Market Act II — Together for new growth (COM(2012) 573 final). The purpose of this second Communication was to build upon the first Single Market Act, identifying four drivers around which to focus new actions:
- developing fully integrated networks (such as transport and energy) in the single market;
- fostering the mobility of citizens and businesses across borders;
- supporting the digital economy across Europe to boost productivity and creativity;
- strengthening social entrepreneurship, cohesion and consumer confidence.
The start of economic and monetary union (EMU) in 1999 gave economic and market integration further stimulus. The euro has become a symbol for the EU, and the number of Member States that have adopted the single currency increased from an original 11 to 19 by 2015, providing one of the most tangible elements of EU integration. The single currency was designed to offer many advantages, such as: eliminating fluctuating exchange rates and exchange costs; making it easier for businesses and consumers to conduct cross-border trade; providing greater economic stability; improving price competitiveness across borders and stimulating consumer choice. The euro is now the second most traded currency after the United States dollar and also the second largest reserve currency.
Fostering economic and social progress has been a key objective of European policies. In March 2010, the European Commission launched the Europe 2020 strategy for smart, sustainable and inclusive growth. Its objectives were to overcome the effects of the 2008 financial and economic crisis and to prepare the EU’s economy for the next decade; integrated economic and employment guidelines were revised within the context of this new strategy setting out the framework for the strategy and reforms required within individual EU Member States. In 2015, these broad guidelines were revised during a stocktaking exercise, with the Council adopting a new set of integrated guidelines for economic policies (Council Recommendation (EU) 2015/1184) and for employment policies (Decision (EU) 2015/1848).
Reinforced economic agenda
The financial, fiscal and economic crises that began in 2007 and 2008 showed that the EU needed a more effective model of economic governance than the existing economic and fiscal coordination. Following actions to stabilise the financial system and the economy, the global financial and economic crisis also prompted a reinforced economic agenda with closer EU surveillance, as well as agreement over a range of policy priorities and a set of targets as part of the Europe 2020 strategy.
In October 2011, the Council adopted an EU economic governance package of six new legislative acts (the so-called ‘six-pack’) which entered into force in mid-December 2011 and put much more emphasis on debt reduction, set minimum requirements for national budgetary frameworks and installed a new procedure to prevent and correct macroeconomic imbalances including a scoreboard of economic and financial indicators that the European Commission monitors. These were followed in May 2013 by two additional Regulations (the so-called ‘two-pack’) designed to further enhance economic integration and convergence amongst euro area Member States:
- Regulation (EU) No 473/2013 of the European Parliament and Council concerning monitoring and assessing draft budgetary plans and relating to the excessive deficit procedure;
- Regulation (EU) No 472/2013 of the European Parliament and Council strengthening economic and budgetary surveillance for EU Member States experiencing or threatened with severe difficulties with respect to their financial stability.
Such regulations created a framework based on a graduated approach, with surveillance requirements for a wide range of budgetary situations, to ensure a seamless continuity of policy monitoring. In January 2015, the European Commission adopted a Communication on making the best use of the flexibility within the existing rules of the Stability and Growth Pact (COM(2015) 12 final). This Communication aimed to strengthen the link between investment, structural reforms and fiscal responsibility.
As a result of the above-mentioned changes the coordination and surveillance of economic policies within the EU has been consolidated with the European semester highlighting the following goals:
- ensuring sound public finances (avoiding excessive government debt);
- preventing excessive macroeconomic imbalances in the EU;
- supporting structural reforms, to create more jobs and growth;
- boosting investment.
This tighter EU surveillance of economic and fiscal policies that was introduced as part of the Stability and Growth pact, is currently accompanied by a new set of tools to tackle macroeconomic imbalances and established the so called European semester in order to provide the annual framework for the coordination of economic policies across the EU, with discussions on economic and budgetary priorities and progress monitoring taking place at the same time every year.
The European semester ensures that the EU Member States discuss their economic and budgetary plans following a fixed annual timetable. In November of each year, the kick-off event of this policy cycle is the publication by the European Commission of the so called ‘autumn package’ that includes, amongst other elements, the Annual growth survey (AGS), setting out the broad EU economic priorities for the year to come, and the Alert mechanism report (AMR), a screening device that launches the macroeconomic imbalance procedure (MIP).
The MIP, in particular, aims to identify, prevent and address potentially harmful macroeconomic imbalances that could adversely affect economic stability in particular EU Member States. The preliminary screening is based on a scoreboardof 14 selected indicators focussing for a time span of ten years on external and internal macroeconomic imbalances, as well as labour market indicators; this is complemented by other relevant economic, financial and social indicators.
The EU Member States that are identified with this screening device undergo a further evaluation, called In-depth review and published in February, to assess how macroeconomic risks are developing, and to determine the presence of imbalances, excessive imbalances or excessive imbalances with corrective action.
To complete the autumn package, the European Commission also publishes the following documents together with the Annual growth survey and the Alert mechanism report:
- the Joint employment report on the employment and social situation in Europe together with the policy responses of national governments;
- the Recommendation for the euro area to address issues critical to the functioning of the single area currency; with suggestions for implementing concrete national measures;
- the Communication on fiscal stance that assesses the overall policy of the euro area in aggregate terms;
- and the European Commission’s opinion on draft budget plans for members of the euro area .
Between March and April of each year, the EU Member States present a set of revised national reform programmes. These are assessed by the European Commission between May and July, and subsequently lead to the publication of a set of country-specific economic and budgetary recommendations; between August and October the Member States incorporate these recommendations into their national reform plans and budget proposals for the following year, after which the annual cycle begins again.
The European Commission’s priorities
In 2014, the European Commission set out a list of 10 key priorities, which would be the focus of its 2015 work programme. Three of these were of particular relevance for economic statistics, namely: the top priority to boost jobs, growth and investment; the EU’s internal market; and economic and monetary union.
It is envisaged that the European Commission’s jobs, growth and investment package will focus on cutting regulation, making smarter use of existing financial resources and making flexible use of public funds in order to provide up to EUR 300 billion in additional private and public investment over three years. This investment should be targeted towards: infrastructure; education, research and innovation; renewable energy and energy efficiency; youth employment.
The internal market is seen as the best asset for meeting the challenges of globalisation. Strengthening the industrial base of the economy in the EU — by bringing industry’s share of GDP in the EU back to 20 % by 2020 — is intended to ensure that Europe maintains its global leadership in strategic sectors with high value jobs. Among the objectives for this priority is creating a capital markets union, intended to make it easier for small businesses to raise money and make Europe a more attractive place for investment.
Completing Europe’s economic and monetary union
Concerning economic and monetary union, the European Commission’s objectives are to: make decisions about support for struggling euro area countries more democratically legitimate; evaluate support and reform programmes not only for financial sustainability but also for their impact on citizens; review the fiscal and macroeconomic surveillance legislation and budgetary rules; encourage further structural reforms in euro area countries.
Delivering a deeper and fairer economic and monetary union was one of the priorities and in June 2015 a report by the presidents of the European Council, the European Parliament, the European Commission, the European Central Bank (ECB) and the Eurogroup was presented providing a plan how to achieve this. The report foresees starting with existing instruments and the current Treaties to boost competitiveness and structural convergence, achieve responsible fiscal policies nationally and for the euro area, complete the financial union and enhance democratic accountability.
In a later stage, there are plans to launch a more far-reaching set of actions to make the convergence process more binding, for example through a set of commonly agreed benchmarks for convergence which would be of a legal nature; establishing a euro area treasury. The report identifies four areas for progress: economic union, financial union to guarantee the integrity of the euro, fiscal union to deliver sustainability and stabilisation, and political union as a foundation through democratic accountability, legitimacy and strengthened institutions. The aim is to achieve a deep and genuine financial union by 2025.
In October 2015, the European Commission presented a Communication On steps towards completing the economic and monetary union (COM(2015) 600 final). The Communication and its accompanying proposals include: a revised approach to the European Semester; the introduction of national competitiveness boards and an advisory European fiscal board; a more unified representation of the euro area in international financial institutions; and steps towards a financial union.
Annual work programmes for 2016 and 2017
European Commission work programmes for 2016 and 2017 provided further details concerning a range of initiatives to improve the economic performance of the EU and euro areas. The 2016 work programme — No time for business as usual presented 23 key initiatives including items relating to high social and employment standards and a thriving economy that benefits all.
The 2017 work programme focused on the delivery of a set of 10 priorities, including, within the economic domain:
- a new boost for jobs, growth and investment (part of which focuses on a financial framework beyond 2020);
- the internal market (part of which focuses on the implementation of the single market strategy; fairer taxation of companies; implementation of the capital markets union action plan;
- a deeper and fairer Economic and Monetary Union (part of which focuses on a strong EU built on a strong Economic and Monetary Union).
As part of the celebrations to mark the 60th anniversary of the Treaties of Rome, the European Commission presented a White Paper on the future of Europe — Reflections and scenarios for the EU-27 by 2025 (COM(2017) 2025 final); this discussed a range of challenges facing the EU including the impact of globalisation and new technologies on society and jobs and highlighted five different scenarios which could be envisaged for the coming years, highlighting among other, their potential impact on financial and economic affairs.
- Annual national accounts (nama_10) and quarterly national accounts (namq_10)
- Annual sector accounts (ESA 2010) (nasa_10) and Quarterly sector accounts (ESA 2010) (nasq_10)
- Balance of payments — International transactions (bop)
- Supply, use and input-output tables — ESA 2010 — current prices (naio_10_cp)
- Supply, use and input-output tables — European system of accounts ESA 2010 — previous year's prices (naio_10_pyp)
- Exchange rates (ert)
- Government statistics (gov)
- Harmonised index of consumer prices (HICP) (prc_hicp)
- Interest rates (irt)
- Purchasing power parities (prc_ppp)