In its annual assessment of the economic and social situation in the Member States issued on 27 February, the European Commission stressed the need to promote investment, pursue responsible fiscal policies and implement well-designed reforms. Challenges vary significantly across countries and call for appropriate and determined policy action. This review of country-specific challenges comes against the backdrop of a European economy that is expected to grow for the seventh consecutive year in 2019, but at a more moderate pace. Employment is at a record high and public finances have also improved across the board, although some countries are still facing high levels of debt. Challenges remain, however, including subdued levels of productivity, intensifying population ageing and rapid technological change. The 28 Country Reports will serve as the basis for discussions with Member States of their national policy choices ahead of their national programmes in April and will lead to the formulation in late spring of annual Country-Specific Recommendations. As a novelty of the package, the Commission has launched a discussion on investment challenges and priorities in the Member States and presented initial ideas as to how EU funds, in particular EU Cohesion Policy funds, can help in the forthcoming programming period 2021-2027.