Economic and Financial Affairs

The European Semester Autumn Package includes the Annual Sustainable Growth Survey, Opinions on euro area Draft Budgetary Plans (DBPs) for 2022, policy recommendations for the euro area and the Commission's proposal for a Joint Employment Report. The package draws upon the Autumn 2021 Economic Forecast which noted that the European economy is moving from recovery to expansion but is now facing new headwinds. This year's Annual Sustainable Growth Survey (ASGS) puts forward an ambitious agenda for 2022 that steers the EU away from crisis management towards a sustainable and fair recovery that strengthens the EU economy's resilience. It also sets out how the Recovery and Resilience Facility (see here the revamped website), the centrepiece of NextGenerationEU - will be more deeply integrated into the new European Semester cycle. This will ensure synergies between these processes and avoid unnecessary administrative burdens for Member States. Moreover, the ASGS lays down how the Sustainable Development Goals (SDGs) will be further integrated into the European Semester to provide a fully updated and consistent SDG reporting across Member States.

The opinions are based on fiscal policy recommendations adopted by the Council in June 2021. They take into account the continued application in 2022 of the general escape clause of the Stability and Growth Pact. Member States are unwinding the temporary emergency measures and increasingly focusing support measures on sustaining the recovery. Recovery and Resilience Facility grants in 2022 will fund 24% of total recovery support measures and will be frontloaded: Member States are expected to spend over 40% of the total amount of allocated RRF grants, pending the decision to disburse following the fulfilment of milestones and targets. In addition, it is expected that nationally financed investment will be preserved or broadly preserved in 2022 in all Member States, as recommended by the Council. The euro area fiscal stance is projected to be expansionary over the 2020-2022 period. In several Member States, including some high debt ones, the supportive fiscal stance will be driven by higher nationally financed current spending, or by unfunded tax cuts. In some cases, this is expected to have a sizeable impact on the underlying fiscal position.

The report could serve as a basis for the Eurogroup to decide on the release of the next set of policy-contingent debt measures. The post-programme surveillance reports for Spain, Portugal, Cyprus and Ireland find that all four Member States retain their capacity to service their outstanding debt. The Joint Employment Report (JER) confirms that the labour market is recovering, though employment is not yet back to pre-crisis levels.

Spain's overall recovery and resilience plan will be financed by €69.5 billion in grants. Payments under the RRF are performance-based and contingent on Spain implementing the investments and reforms outlined in its recovery and resilience plan. This first payment request relates to 52 milestones covering several reforms in the areas of sustainable mobility, energy efficiency, de-carbonisation, connectivity, public administration, skills, education, and social, labour and fiscal policy. The Commission now has two months to assess the request. It will then send its preliminary assessment of Spain's fulfilment of the milestones and targets required for this payment to the Council's Economic and Financial Committee. More information on the process of the payment requests under the RRF is available in this Q&A. More information on the Spanish recovery and resilience plan is available here.

A year earlier, the rate was -0.3%. EU annual inflation was 4.4% in October 2021, up from 3.6% in September. A year earlier, the rate was 0.3%. These figures are published by Eurostat, the EU statistical office. The lowest annual rates were registered in Malta (1.4%), Portugal (1.8%), Finland and Greece (both 2.8%). The highest annual rates were recorded in Lithuania (8.2%), Estonia (6.8%) and Hungary (6.6%). Compared with September, annual inflation rose in all twenty-seven Member States. In October, the highest contribution to the annual euro area inflation rate came from energy (+2.21 percentage points, pp), followed by services (+0.86 pp), non-energy industrial goods (+0.55 pp) and food, alcohol & tobacco (+0.43 pp).

The Communication highlights the in-built ability of competition policy to adapt to new market circumstances, policy priorities and customer needs: for example, on the same day the Communication was adopted, the Commission adopted the sixth amendment to the State aid Temporary Framework, which will enable Member States to provide targeted support to companies during the coronavirus crisis. Furthermore, the Commission is currently pursuing a review of competition policy tools to make sure all competition instruments (merger, antitrust and State aid control) remain fit for purpose, as well as complement its existing toolbox.