What to look out for in the latest European Semester package

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What to look out for in the latest European Semester package

Implementation of the European Commission’s country-specific policy recommendations (CSRs) is at a low rate overall. Whether this trend has continued,

Publishing date: 26 February 2019
Authors: Guntram B. Wolff Konstantinos Efstathiou

This Wednesday, the European Commission is expected to adopt the winter package of the so-called European Semester, the cycle of surveillance and coordination of economic policies at the EU level. The package will include the categorisation of countries in the Macroeconomic Imbalances Procedure (MIP) for 2019 and, thus, mark a significant juncture in this year’s process.

Specifically, for a number of member states[1], an in-depth review (IDR) will determine the existence and nature of macroeconomic imbalances and evaluate their gravity. Based on that assessment, the member states will be classified accordingly into groups: countries with no imbalances, those with imbalances, and those with excessive imbalances.

This classification will, in turn, determine the stringency of monitoring that member states will be subject to in relation to their country-specific recommendations (CSRs), as well as the possible enforcement mechanisms available to European institutions in case of poor compliance.

But do countries actually follow the guidance they receive from Brussels on their economic policies? The answer is that so far overall implementation rates have been low[2]. Between 2013 and 2017, the implementation record of member states has ranged from what the European Commission considers “limited progress”[3] to “some progress”[4] (Figure 1).

In addition, implementation has deteriorated over time. This has been the case particularly among countries classified as having excessive imbalances (Figure 2). Whether this trend continued into 2018 remains to be seen on Wednesday, when the Commission’s assessment of progress with last year’s CSRs will be also released.

Notes

[1] Last November, the Alert Mechanism Report concluded that 15 member states were facing significant risk of imbalances. As a result no IDR is carried out for these member states, which are classified in the no imbalances category. Categorisation is pending only for the remaining 13 member states (Bulgaria, Croatia, Cyprus, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Romania, Spain, and Sweden).

[2] The European Commission uses five-point scale to assess implementation of recommendations: “no progress”, “limited progress”, “some progress”, “substantial progress” and “fully addressed”.

[3] “Limited progress” means that the member state: has announced certain measures but these only address the CSR to a limited extent; and/or presented legislative acts in the governing or legislator body but these have not been adopted yet and substantial non-legislative further work is needed before the CSR will be implemented; presented non-legislative acts, yet with no further follow-up in terms of implementation which is needed to address the CSR.

[4] “Some progress” means that the member state: has adopted measures that partly address the CSR; and/or the Member State has adopted measures that address the CSR, but a fair amount of work is still needed to fully address the CSR as only a few of the adopted measures have been implemented. For instance: adopted by national parliament; by ministerial decision; but no implementing decisions are in place.

About the authors

Guntram B. Wolff

Guntram Wolff is a Senior fellow at Bruegel. He is also a Professor of Economics at the Université libre de Bruxelles (ULB).

From 2022-2024, he was the Director and CEO of the German Council on Foreign Relations (DGAP) and from 2013-22 the director of Bruegel. Over his career, he has contributed to research on European political economy, climate policy, geoeconomics, macroeconomics and foreign affairs. His work was published in academic journals such as Nature, Science, Research Policy, Energy Policy, Climate Policy, Journal of European Public Policy, Journal of Banking and Finance. His co-authored book “The macroeconomics of decarbonization” is published in Cambridge University Press.

An experienced public adviser, he has been testifying twice a year since 2013 to the informal European finance ministers’ and central bank governors’ ECOFIN Council meeting on a large variety of topics. He also regularly testifies to the European Parliament, the Bundestag and speaks to corporate boards. In 2020, ranked him one of the 28 most influential “power players” in Europe. From 2012-16, he was a member of the French prime minister’s Conseil d’Analyse Economique. In 2018, then IMF managing director Christine Lagarde appointed him to the external advisory group on surveillance to review the Fund’s priorities. In 2021, he was appointed member and co-director to the G20 High level independent panel on pandemic prevention, preparedness and response under the co-chairs Tharman Shanmugaratnam, Lawrence H. Summers and Ngozi Okonjo-Iweala. From 2013-22, he was an advisor to the Mastercard Centre for Inclusive Growth. He is a member of the Bulgarian Council of Economic Analysis, the European Council on Foreign Affairs and advisory board of Elcano. He is also a fellow at the Kiel Institute for the World Economy.

Guntram joined Bruegel from the European Commission, where he worked on the macroeconomics of the euro area and the reform of euro area governance. Prior to joining the Commission, he worked in the research department at the Bundesbank, which he joined after completing his PhD in economics at the University of Bonn. He also worked as an external adviser to the International Monetary Fund. He is fluent in German, English, and French. His work is regularly published and cited in leading media.
Konstantinos Efstathiou

Konstantinos, a Greek citizen, works in Bruegel as an Affiliate Fellow in the Macroeconomics and Governance area. Before joining Bruegel, Konstantinos was at the European Commission, as a Blue Book Trainee in the Cabinet of President Juncker. He also interned at the Central Bank of Luxembourg (BCL) as a research assistant, involved in projects related to the Wage Dynamics Network (WDN) research group.

He holds a Master in International Economics and International Relations from the Johns Hopkins University School of Advanced International Studies (SAIS), where he specialized in Quantitative Methods and European Studies.

Konstantinos’ research interests include macroeconomics, European economic governance and international economics.

Konstantinos is a native speaker of Greek, speaks fluent English and has good knowledge of French.