Saturday, 2 April 2011

European Council: Economic policy reform priorities I

What impetus, political directions and priorities did the spring European Council provide the EU and the member states with regard to economic policy?

The European Council speaks through its conclusions:

European Council 24/25 March 2011 Conclusions; Brussels, 25 March 2011 (EUCO 10/11; 34 pages)


Procedure

The European Council adheres to the improved policy planning cycle put into practice since the beginning of 2011 and known as the European semester. Each EU member state is going to present the final version of two programmes (by the end of April):

a) each euro area member a Stability Programme, and for a state which still has not adopted the euro currency a Convergence Programme, in accordance with the Stability and Growth Pact (SGP);

b) a National Reform Programme (NPR) as a means towards the Europe 2020 strategy aims of smart, sustainable and inclusive growth.

The European Commission will then have a further chance to issue opinions and recommendations aimed at individual member states (end of May or beginning of June).

Different Council configurations can be expected to contribute with their grain of wisdom, before the June 2011 European Council concludes the first integrated planning cycle, laying the foundation for the ultimate success or failure of the policies for sustainable public finances and the EU2020 decade of growth reforms in the European Union.

The next steps are schematically outlined in paragraph 2 of the European Council conclusions:

2. Within the new framework of the European semester, the European Council endorsed the priorities for fiscal consolidation and structural reform (1). It underscored the need to give priority to restoring sound budgets and fiscal sustainability, reducing unemployment through labour market reforms and making new efforts to enhance growth. All Member States will translate these priorities into concrete measures to be included in their Stability or Convergence Programmes and National Reform Programmes. On this basis, the Commission will present its proposals for country-specific opinions and recommendations in good time for their adoption before the June European Council.

European semester

The clearest exposition of the European semester is probably the Commission memo (with links to relevant proposals):

European semester: a new architecture for the new EU Economic governance – Q&A; Brussels, 12 January 2011 (MEMO/11/14)

See also Grahnlaw Suomi Finland: EU EPSCO Council: Recalling the European semester.

In Finnish, for instance 'EU:n talouspolitiikan eurooppalainen ohjausjakso (European Semester)' or in Swedish 'Katekes och mässbok för EU-toppmötet'.


”The priorities”

Even if later paragraphs add some text, without the footnote (1) in paragraph 2 of the European Council conclusions we would have been even more ignorant with regard to what ”the priorities” for fiscal consolidation and structural reform are:

In line with the Council's conclusions of 15 February and 7 March 2011 and further to the Commission's Annual Growth Survey. See also the Presidency's synthesis report of 16 March 2011.

Without this footnote, readers would have been totally lost. However, the European Council seems to care little about offering readers convenient guidance through links to relevant documents or even exact references. ”In line with” is sibylline enough, but we are invited to embark on a search for four different documents.

Adding to opacity and poor governance, the European Council generally does not acknowledge even the documents specifically submitted to it by different Council configurations.


Annual Growth Survey (AGS)

Even if the European Council refers to the first Annual Growth Survey (AGS) in an off-hand manner, this is the logical place to start. This communication from the Commission is the synthesis or catechism of needed macro-economic and growth-enhancing reforms:

Annual Growth Survey: advancing the EU's comprehensive response to the crisis; Brussels, 12.1.2010 COM(2011) 11 final (10 pages, plus three annexed reports)

Back in January, the reports annexed to the Annual Growth Survey were:

Annex 1: Progress report on Europe 2020 (16 pages)

Annex 2: Macro-economic report (23 pages)

Annex 3: Draft Joint Employment Report (13 pages)

The draft JER has since then become the Joint Employment Report, as adopted by the Council EPSCO) 7 March 2011.

See also Grahnlaw: EU EPSCO and Competitiveness Council: Annual Growth Survey is cornerstone.


The foundation

As we have seen, the off-hand remark by the European Council regarding the Annual Growth Survey from the Commission actually leads us to four documents (62 pages in all), instead of one.

Thanks to the proactive stance of the Commission, in the AGS we have a foundation on which later Council and European Council conclusions are built.

Part II is going to look at the Council documents the European Council referred to.



Ralf Grahn



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