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European Commission Economic and Financial Affairs
E-NEWS - Issue 158
In this issue - 24 May 2017

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Valdis Dombrovskis © European Union , 2017
European Semester 2017 Spring Package: country-specific recommendations call on Member States to strengthen fundamentals

On 22 May, the Commission presented its 2017 country-specific recommendations (CSRs), setting out its economic policy guidance for individual Member States for the next 12 to 18 months. The economy in the EU and the euro area is proving resilient, but challenges, such as slow productivity growth, the legacies of the crisis – including persistent inequality – and uncertainty arising mostly from external factors continue. In its guidance, the Commission calls on Member States to use this window of opportunity to strengthen the fundamentals of their economies by implementing the economic and social priorities identified in common at the European level: boosting investment, pursuing structural reforms and ensuring responsible fiscal policies. Particular attention is paid to the challenges and priorities identified for the euro area. Moreover, to strengthen the positive trends and the convergence within countries and the EU, the Commission asserts that it is essential to achieve more inclusive, robust and sustainable growth, including through greater competitiveness and innovation.

See also : European Semester 2017 Spring Package: Commission issues country-specific recommendations
Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue
Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue

“Economic trends are overall positive and we should use this window of opportunity to make European economies more competitive, resilient and innovative.”

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Pierre Moscovici © European Union, 2017
Excessive Deficit Procedures closed for Croatia and Portugal, leaving only four Member States under the corrective arm of the Pact

On 22 May 2017, the Commission recommended that the Excessive Deficit Procedures be closed for Croatia and Portugal. If the Council follows the Commission’s recommendation, this would leave only four Member States under the corrective arm of the Pact, down from 24 countries in 2011. The Commission also adopted reports for Belgium and Finland in which it concluded that they are in compliance with the debt criterion of the Treaty. The Commission addressed a warning to Romania on the existence of a significant deviation from the adjustment path toward the medium-term budgetary objective in 2016 and recommended that the Council adopt a recommendation for Romania to take appropriate measures in 2017 to correct the deviation. This is the first time that this procedure of the EU economic governance framework has been applied. The procedure gives the authorities the opportunity to take corrective action in order to avoid the opening of an excessive deficit procedure.

See also : Excessive deficit procedures - overview
Valdis Dombrovskis, Marianne Thyssen, Pierre Moscovici © European Union , 2017
Macroeconomic Imbalances Procedure: Commission concludes there is no ground for stepping up procedure for Cyprus, Italy and Portugal

The European Semester Spring package presented on 22 May takes account the conclusions of and follows up on February's European Semester Winter Package, including on the Macroeconomic Imbalances Procedure. For Cyprus, Italy and Portugal, which were experiencing excessive macroeconomic imbalances, the Commission concluded that there is no analytical ground for stepping up the procedure, provided that the three countries fully implement the reforms set out in their country-specific recommendations. The Macroeconomic Imbalances Procedure aims to identify, prevent and address the emergence of potentially harmful macroeconomic imbalances that could adversely affect economic stability in a particular EU country, the euro area, or the EU as a whole.

See also : European Semester 2017 Spring Package: Commission issues country-specific recommendations
Press opportunity before Eurogroup meeting © European Union , 2017
Eurogroup welcomes preliminary agreement reached with Greece on road to finalising second review of its macroeconomic adjustment programme

Euro area finance ministers welcomed the preliminary agreement reached between Greece and the EU on a new set of policy reforms to support the country's economic recovery. The agreement is an important step towards finalisation of the second review of Greece's macroeconomic adjustment programme. Reform measures legislated by Greece cover areas such as pensions, income tax, the labour market and the energy sector. Finance ministers also exchanged views on the economic situation and recent inflation developments in the euro area, following the Commission's presentation of its spring 2017 economic forecast on 11 May. Finally, the Eurogroup was briefly informed about the main findings of the 7th post-programme surveillance mission to Spain, carried out by the staff of the European Commission and the European Central Bank on 24-26 April. The mission confirmed that there was no risk of non-repayment of the loans that Spain received to recapitalise its banking sector in 2012-2014, supported by the European Stability Mechanism.

See also : Eurogroup, 22/05/2017
European Union, 2017
Post-programme surveillance mission to Ireland: outlook for economy remains bright but external risks significant

Staff from the European Commission, in liaison with staff from the European Central Bank, visited Dublin from 16 to 19 May to conduct the seventh post-programme surveillance (PPS) review mission for Ireland. While the outlook for the Irish economy remains bright, external risks are significant. Ireland has made substantial progress in addressing crisis legacies, including by repairing private sector balance sheets, reducing public debt and creating employment. Moreover, growth of the domestic economy remains robust, driven by positive developments in the labour market, consumption and core investment. However, some of the striking headline figures are heavily distorted by the activities of multinational enterprises. Risks to the economic outlook remain tilted to the downside and include uncertainty surrounding the final outcome of the negotiations between the UK and the EU; possible changes to international tax and trade policies; subdued credit demand; and an acceleration in residential property prices.

See also : Statement by European Commission and ECB staff following the conclusion of the seventh post-programme surveillance mission to Ireland
Couple in crowd © European Communities
Commission publishes reflection paper on how EU can best harness globalisation

The Commission published a reflection paper on 10 May that opens up a vital debate on how the EU can best harness globalisation and respond to its opportunities and challenges. On the external front, the paper focuses on the need to shape a truly sustainable, multi-lateral global order, based on shared rules and a common agenda. The EU could, for example, push for new rules to create a level-playing field by addressing harmful and unfair behaviour like tax evasion, government subsidies or social dumping. On the domestic front, the paper suggests tools to protect and empower citizens through robust social policies and by providing them with the necessary education and training throughout their lives. Progressive tax policies, investing in innovation and strong welfare policies could all help redistribute wealth more fairly. Meanwhile, use of EU structural funds to assist vulnerable regions and the EU Globalisation Adjustment Fund to help displaced workers find another job can help mitigate the negative impacts of globalisation. Following this paper, the new Reflection Paper on EMU deepening will be released on 31 May.

See also : European Commission - EUROSTAT
Image taken from Investment Plan webpage © European Union, 2014
Investment Plan: Commission welcomes vote by European Parliament committees as EFSI 2.0 nears final adoption

The Commission has welcomed the vote by Members of the European Parliament’s Budgets and Economic and Monetary Affairs committees in which they agreed on their position on extending, expanding and reinforcing the European Fund for Strategic Investments (EFSI), the so-called “EFSI 2.0”. It is now up to the Parliament and Member States to reach agreement on final adoption of the EFSI 2.0 proposal. Meanwhile, the European Investment Fund (EIF) and Banca Popolare Pugliese, assisted by Banca Akros, signed an agreement to provide EUR 80 million in financing to innovative Italian SMEs and small mid-caps over the next two years. The agreement is part of the European Commission’s InnovFin initiative, backed by the EU's research and innovation programme Horizon 2020. It was made possible by the support of the European Fund for Strategic Investments (EFSI), which is the central pillar of the European Commission's Investment Plan for Europe, also known as the “Juncker Plan”.

See also : Announcements
Inflation © iStockphoto
Annual inflation up to 1.9% in the euro area, up to 2.0% in the EU

Euro area annual inflation was 1.9% in April 2017, up from 1.5% in March. In April 2016 the rate was -0.2%. EU annual inflation was 2.0% in April 2017, up from 1.6% in March. A year earlier the rate was -0.2%. These figures come from Eurostat, the statistical office of the EU. The lowest annual rates were registered in Romania (0.6%), Ireland (0.7%) and Slovakia (0.8%). The highest annual rates were recorded in Estonia (3.6%), Lithuania (3.5%) and Latvia (3.3%). Compared with March 2017, annual inflation fell in six Member States, remained stable in three and rose in nineteen. The largest upward impacts to euro area annual inflation came from fuels for transport (+0.39 percentage points), package holidays (+0.12 pp) and heating oil (+0.11 pp), while telecommunication (-0.11 pp), garments (-0.08 pp) and bread & cereals (-0.05 pp) had the biggest downward impacts.

See also : Annual inflation up to 1.9% in the euro area
ECFIN eNews reader survey © European Union, 2017
ECFIN website survey: What do you think of it?

The EU economic and financial landscape – and economic governance – continues to evolve in 2017. The ECFIN website not only presents the current developments and specific initiatives of the European Commission on economic and financial affairs. It also provides you a wide set of databases, an extensive archive of economic publications and detailed documentation relating to many important policies, such as those based on the Stability and Growth Pact, the Macroeconomic Imbalance procedure, or macro-financial assistance for non-EU partner countries. We would like to kindly ask you to let us know your views and suggestions. How could the website be improved? Thank you for sharing your thoughts by spending just a few minutes to answer the online questionnaire. We appreciate your feedback.

See also : Economic and Financial Affairs
Graph of the Week

What's behind the 1.7% growth forecast for the euro area in 2017?

What's behind the 1.7% growth forecast for the euro area in 2017?

Selected Speeches
23 May 2017
Vice President Valdis Dombrovskis. Remarks at the ECOFIN press conference. Speech 17/1444 of 23 May
22 May 2017
Vice President Valdis Dombrovskis. Remarks at the European Semester Spring Package press conference. Speech 17/1425 of 22 May.
22 May 2017
Commissioner Pierre Moscovici. Discours d'ouverture du Commissaire Moscovici lors de la conférence de presse de l'Eurogroupe. Speech 17/1437 of 22 May.

Public consultation on potential restrictions on large payments in cash. Deadline 31 May
26-27 May
G7 Summit
1 June
Brussels Economic Forum
12–15 June
European Parliament Plenary
15–16 June
22–23 June
European Council
3–6 July
European Parliament Plenary
4–5 July
Hamburg, Germany
G20 Meeting of Finance Deputies
7–8 July
Hamburg, Germany
G20 Summit
10–11 July
15-16 September
Informal Eurogroup/ECOFIN
9-10 October
12-13 October
G20 Meeting of Finance Ministers and Central Bank Governors
19-20 October
European Council
6-7 November
4-5 December
14-15 December
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