Annual Growth Survey
What is the Annual Growth Survey?
The Annual Growth Survey (AGS) is the Commission's main tool for setting out the economic and social priorities for the EU for the following year. It provides analysis of European economy and sets the appropriate policy response to the identified challenges, in order to foster growth, inclusiveness and convergence in the EU, in line with the Union's long-term growth strategy. The AGS marks the start of the European Semester annual cycle of economic policy coordination and gives the horizontal policy guidance for the country-specific phase of the European Semester, leading to adoption of policy recommendations for each Member State every summer.
What are the next steps of the Annual Growth Survey?
After the publication by the Commission, the Annual Growth Survey is debated at EU and national levels, including by the social partners. In particular, the Council and the European Parliament adopt positions. Taking into account these inputs, the Spring European Council provides guidance on reform priorities, which should then be reflected in the programmes and plans of Member States.
What are the next steps of the European Semester?
After the publication of the AGS, the Commission continues the dialogue with Member States, stakeholders and social partners to develop a common understanding of the challenges in the Member States. Based on this dialogue and further assessment, the Commission presents in February its annual analysis of the economic and social situation in Member States, including progress in implementing country-specific recommendations issued in previous years and an assessment of possible imbalances.
Member States have several opportunities to feed into the Commission’s assessment, for example, during technical mission to the Member States of Commission staff, the bilateral meetings held in Brussels, and political missions to the Member States under the leadership of Vice-President Dombrovskis.
In April, Member States submit to the Commission their national reform programmes on economic policies and stability or convergence programmes on budgetary policies. The Commission analyses them and then issues country-specific recommendations (CSRs) in May, in time for these to be endorsed by the European Council before the summer and adopted by ECOFIN in July. Member States should then incorporate this policy guidance into their annual budgets, national legislation and policy plans.
Alert Mechanism Report
What is the Alert Mechanism Report?
The alert mechanism report (AMR) is issued in November as part of the annual surveillance of the macroeconomic imbalance procedure (MIP), which aims to identify and address imbalances that might hinder the normal functioning of the economies of Member States or the EU and endanger the economic and monetary union.
The analyses in the AMR include an economic reading of a scoreboard of agreed indicators. The AMR is not a mechanical exercise. The Commission does not launch an in-depth review because an indicator is beyond the indicative thresholds. Instead, the Commission takes the complete economic picture into account. It is only on the basis of the in-depth reviews that the Commission concludes whether imbalances, and potentially excessive imbalances, exist or not.
What is an imbalance?
Regulation No 1176/2011 on the prevention and correction of macroeconomic imbalances defines a macroeconomic imbalance as "any trend giving rise to macroeconomic developments which are adversely affecting, or have the potential to adversely affect, the proper functioning of the economy of a Member State or of the Economic and Monetary Union, or of the Union as a whole". It defines excessive imbalances as "severe imbalances that jeopardise or risk jeopardising the proper functioning of the Economic and Monetary Union". As the definition provided in the regulation is very general, an economic interpretation is needed to assess the presence of unsustainable trends and vulnerabilities that, if not corrected, could have harmful implications for macroeconomic stability for the country itself, the euro area or the EU.
In practice, these imbalances include both situations of vulnerabilities (e.g. high debt levels) and unsustainable trends (e.g. excessive increases in house prices or credit) that could result in abrupt and large, and hence damaging, adjustment. For example, having a large and persistent current account deficit is considered an imbalance if it runs the risk of leading to a 'sudden stop' and ensuing large welfare costs. By the same token, a large and persistent current account surplus may be an indicator that excess savings are not being used efficiently to sustain investment in the domestic economy.
What are the next steps following the adoption of the Alert Mechanism Report?
After the publication by the Commission, the AMR is discussed in the Economic and Financial Affairs Council (ECOFIN), the Eurogroup if they concern euro area Member States and with the European Parliament. Moreover, the European Council holds a discussion following the publication of the Annual Growth Survey and the AMR in order to agree on the main areas for coordination of economic policies and reforms.
Taking all feedback into account, the Commission prepares country-specific in-depth reviews in the following months and presents them in February. This involves a dialogue with the Member States concerned. It is be on the basis of the in-depth reviews that the Commission concludes whether imbalances or excessive imbalances exist, and subsequently prepares the appropriate policy recommendations for each Member State.
Euro area recommendation
What is the legal basis for the euro area recommendation?
The euro area recommendation related to economic policy is adopted on the basis of Articles 136 and 121 of the Treaty on the Functioning of the European Union. It is a recommendation for a Council recommendation.
The euro area recommendation provides tailored advice to euro area Member States on issues relevant for the functioning of the euro area as a whole. It reflects the general priorities identified in the Commission's Staff Working Document accompanying the recommendation and in the Commission's Annual Growth Survey for the EU as a whole.
The euro area recommendation covers issues concerning the whole monetary union, such as policies related to correcting macro-economic imbalances, the euro area fiscal stance and the completion of the Economic and Monetary Union.
What is the analytical basis for the euro area recommendation?
The euro area recommendation is supported by a solid economic analysis by the Commission services on key issues for the functioning of the euro area. This is reflected in the Commission Staff Working Document accompanying the recommendation as well as in other documents that are published during the economic exercise.
What are the next steps in the adoption and implementation of the euro area recommendation?
The Eurogroup and the Council discuss the euro area recommendation before EU Heads of State and Government endorse it. The discussions on the euro area priorities, alongside the euro area recommendation and other inputs from the EU institutions then provide orientation for the National Reform Programmes and the Stability Programmes prepared by the Member States in April, as well as the respective country-specific recommendations prepared by the Commission in May.
Based on the euro area recommendation, the assessment of the reform implementation and the remaining challenges as well as Member States policy programmes, the Commission presents its draft country-specific recommendations for the next policy cycle. This leaves ample time for further dialogue with the Member States.
Joint Employment report
What is the Joint Employment report?
The Joint Employment Report (JER) is mandated by Article 148 TFEU and is a key element in EU economic governance. It provides an annual overview of the main employment and social developments in the EU as a whole, as well as Member States' reform actions. In addition, the Joint Employment Report monitors Member States' performance in relation to the European Pillar of Social Rights.
What are the next steps following the publication of the draft Joint Employment report?
The draft version will be discussed within the Employment Committee and the Social Protection Committee, with a view to final adoption by the EPSCO Council in March.
What is the methodology for attributing a certain mark to a Member State for an indicator of the Social Scoreboard?
The scoreboard serves as a reference framework to monitor 'societal progress' within the three dimensions of the Pillar: Equal opportunities and access to the labour market, Dynamic labour markets and fair working conditions, and Public support / social protection and inclusion. Twelve areas have been selected on which societal progress could be measured, associated with one of the three dimensions above. The scoreboard benchmarks EU Member States performances vis-à-vis the EU and the euro area averages and each mark is a reflection of levels for a certain indicator also taking into account longer-term trends.