The 2015 Annual Growth Survey (AGS) published by the European
Commission today focuses on putting Europe firmly back on a path of
sustainable job creation and economic growth. The arrival of the new
Commission, with an ambitious agenda for Jobs, Growth, Fairness and
Democratic Change, is the right moment to generate a new momentum. By
proposing an ambitious Investment Plan to mobilise at least € 315
billion of additional public and private investment over the next three
years, Europe is turning a page (Investment Plan press material).
This is part of the European Commission's overall approach to support
job creation and get Europe growing. As part of this approach, the
Commission, in its Annual Growth Survey 2015, recommends pursuing an
economic and social policy based on three main pillars: (1) a boost to investment, (2) a renewed commitment to structural reforms and (3) the pursuit of fiscal responsibility.
Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue said: "The
European Union is facing a risk of prolonged low economic growth, which
would aggravate the already serious social problems in parts of the
Union. This is why today we propose a strategic policy mix based on
investment, structural reforms and fiscal responsibility. We call for
urgent action involving governments, parliaments and social partners at
EU level and in each Member State. By acting together now, we can make
sure that the conditions for sound and sustainable growth in the future
are met and that our citizens have more opportunities for employment."
Marianne Thyssen, EU Commissioner for Employment, Social Affairs, Skills and Labour Mobility, commented:
"Job creation, social policies are at the heart of our agenda and
feature prominently in the Annual Growth Survey. We should all take
ownership of this. Member States that courageously reformed their labour
markets have proven that reforms really pay off. This should inspire
other Member States to follow suit. The € 315 billion Investment Plan
that the Commission presented can boost the results to even higher
levels."
The AGS launches the annual cycle of economic
governance, sets out general economic priorities for the EU and provides
Member States with policy guidance for the following year. Despite the
efforts made at national and EU level, the recovery of the European
economy is still weak and fragile. This in turn is hampering progress in
reducing the high level of unemployment and poverty. Restoring
confidence and getting the entire EU to grow again can only be done by
working together: it requires a determined commitment from Member States
to do things differently at national level. Given the important
differences between the economic situation in the Member States, the
right approach will inevitably vary from country to country. To give a
common direction and steer national approaches, the Commission
recommends three main pillars for the EU's economic and social policy in 2015:
1. A boost to investment
Since
the global economic and financial crisis, the EU has been suffering
from low levels of investment. Collective and coordinated efforts at
European level are needed to reverse this downward trend and put Europe
firmly on the path of economic recovery. Investments are needed to
modernise welfare systems, fund education, research and innovation; to
make energy greener and more efficient; to modernise transport
infrastructure and to roll-out far-reaching and faster broadband.
The European Commission is ready to do its share: just two days ago, the Commission launched a € 315 billion Investment Plan for the next three years (see IP/14/2128). This "Investment Offensive" is based on three strands,
which are mutually reinforcing: (1) mobilising investment finance
without creating new debt; (2) supporting projects and investments in
key areas such as infrastructure, education, research and innovation and
(3) removing sector-specific and other financial and non-financial
barriers to investment. The European Commission calls on the European
Parliament and Member States to support the Investment Plan and take the
necessary action swiftly so that there is a decisive effect on the
European economy.
2. A renewed commitment to structural reforms
As
the focus shifts from tackling emergencies stemming from the crisis to
building solid foundations for jobs and growth, a renewed commitment to
structural reforms is needed. At EU level, deepening
the Single Market is a structural reform "par excellence", helping our
economies to modernise and to make Europe more competitive, as well as
attractive for investors. Priorities include removing remaining
regulatory and non-regulatory barriers across sectors such as energy,
telecoms, transport and the Single Market for goods and services.
At Member State level,
the Commission recommends focusing on a number of key reforms: making
labour markets more dynamic and tackling the high level of unemployment;
ensuring the efficiency and adequacy of pension and social protection
systems; creating more flexible product and services markets; improving
business investment conditions and the quality of research and
innovation (R&I) investment; and making public administrations
across Europe more efficient.
3. Pursuing fiscal responsibility
Progress
in achieving fiscal consolidation has been significant: average fiscal
deficits in the EU have been cut in just three years from 4.5% of GDP in
2011 to around 3.0% of GDP in 2014. The decrease in the number of
countries under an excessive deficit procedure – down to 11 in 2014 from
24 in 2011 – reflects these fiscal improvements, which were
instrumental in restoring confidence in the soundness of our public
finances and stabilising the financial situation. Securing long-term
control over deficit and reducing high debt levels remains a key
building block towards sustainable growth. We need responsible and growth-friendly fiscal policies,
in line with the Stability and Growth Pact, taking into account the
particular national situation. Countries with more fiscal space have
more scope to encourage domestic demand and investment. Tax systems need
to become fairer and more efficient and tax fraud and evasion must be
tackled decisively.
Streamlining European Economic Governance...
The European Commission also proposes to streamline and reinforce the European Semester by
giving it a sharper focus and a more political role based on the three
pillars of the Annual Growth Survey. A more focused European Semester
should strengthen the social market economy and increase the
effectiveness of economic policy coordination at the EU level through an
increased accountability and an improved ownership by all actors,
including social partners. The new economic policy cycle will also
simplify Commission outputs and reduce reporting requirements of Member
States, while making the process more open and multilateral (see Annex 1
and MEMO/14/2180).
The Alert Mechanism Report
The Annual Growth Survey is accompanied by the Alert Mechanism Report (AMR),
which is part of the regular surveillance under the Macroeconomic
Imbalances Procedure, and aims to identify and address imbalances that
may hinder the performance of national economies, the euro area, or the
EU as a whole. Employment and social indicators are being introduced
into the macroeconomic imbalances procedure and should be used to gain a
better understanding of the labour market and social developments and
risks.
This AMR shows that even though EU Member States have made
progress towards correcting some of their imbalances and competitiveness
has improved in several economies, macroeconomic imbalances and their
major social consequences remain a serious concern. The slow recovery
and the very low inflation have been an obstacle to a more pronounced
reduction of the imbalances and related macroeconomic risks.
Moreover,
the rebalancing of current accounts remains asymmetric. Although
deficits have been reduced in a number of countries, the process has
been largely driven by falling demand and more particularly, falling
investment. This could have negative implications for medium-term growth
potential if not corrected. Meanwhile, Germany and the Netherlands have
continued to record very high current account surpluses, which reflect
weak domestic demand and investment.
As regards individual countries, the Commission finds that further analyses (in-depth reviews) are warranted to examine in detail the accumulation and unwinding of imbalances and their related risks in 16 Member States:
Belgium, Bulgaria, Germany, Ireland, Spain, France, Croatia, Italy,
Hungary, the Netherlands, Portugal, Romania Slovenia, Finland, Sweden
and the United Kingdom (for more details, see MEMO/14/2231).
Joint Employment Report
The Annual Growth Survey 2015 is also accompanied by the publication of the Commission proposal for the Joint Employment Report. It
analyses the employment situation in Europe and the policy responses by
Member States. The report shows that substantial structural reforms pay
off. It also analyses the potential for improving the employment and
social performance of the EU as a whole (for more details, see MEMO/14/2234).
Annex
1. Timeline of the streamlined European Semester
2. Key findings of the Commission's autumn 2014 forecast
Real GDP growth is expected to reach 1.3%
in the EU and 0.8% in the euro area for 2014 as a whole. This should
rise slowly in 2015, to 1.5 % and 1.1% respectively, as foreign and
domestic demand improve. For 2016, an acceleration of economic activity
to 2.0% and 1.7% respectively is expected.
Unemployment reached 24.6 million people in August 2014
– 5 million are aged between 15 and 24. Long-term unemployment is very
high. Unemployment rates strongly vary across Member States, from 5.1%
in Germany and 5.3% in Austria to 24.8% in Spain and 26.8% in Greece in
2014.
The low inflation trend is expected to continue this year,
with lower commodity prices, in particular for energy and food, and the
weaker-than-expected economic outlook. The gradual recovery of economic
activity over the forecast horizon is expected to lead to an increase
in inflation in the EU, from 0.6% in 2014 to 1.0% in 2015 and 1.6% in
2016.
The deficit-to-GDP ratios are set to decrease further this year,
albeit more slowly than in 2013, from 4.5% in 2011 to respectively 3.0%
for the EU and 2.6% for the euro area. Government deficits are forecast
to continue falling over the next two years, driven by strengthening
economic activity. The debt-to-GDP ratios of the EU and the euro area
are expected to peak next year at 88.3% and 94.8% respectively and
remain high in a number of countries.
3. Examples of effective structural reforms in the Member States
In Spain,
in December 2013, the government approved a Law guaranteeing market
unity in the interest of the freedom of movement and establishment of
persons and the free movement of goods. The law is an ambitious
rationalisation of overlapping legislation in Spain, addressing the
fragmentation of the domestic market and increasing competition in
product markets. According to the Spanish Authorities, the reform is
estimated to raise GDP by more than 1.5% over time.
Portugal
enacted a number of labour market reforms between 2011 and 2013. The
protection of workers under permanent and fixed-term contracts was
aligned. Working time legislation was made more flexible, and measures
were taken to better adapt wages to productivity at the firm level.
Unemployment benefits were reformed and eligibility was extended. The
Public Employment Service was reformed, existing Active Labour Market
Policies were reviewed and new programmes introduced, including targeted
to the youth. The unemployment rate declined by about 2 percentage
points between 2013 and 2014.
Poland initiated an
ambitious reform facilitating access to regulated professions. Access
to 50 professions – including lawyers, notaries, real estate agents and
taxi drivers – has been liberalised in the first wave of reform in 2013.
Decisions covering a further 91 professions were adopted by the Polish
Parliament in April 2014 and deregulation of 101 additional professions
is planned for early 2015.
Italy implemented
a set of measures in 2013 aimed at increasing competition and
transparency in the gas and electricity markets. The initiatives taken
by the Italian government have helped to address the long-standing issue
of high energy prices in Italy and, according to estimates from the
energy regulator, have helped to reduce end-users prices.
