Spring semester package recast to mitigate crisis impact

In the immediate phase, the focus is on investing in public health and protecting jobs and companies

Photo: EU Valdis Dombrovskis, Paolo Gentiloni and Nicolas Schmit (L-R).

The EU executive has proposed on Wednesday its 5-component Spring semester package to provide guidance to the Member States for strengthening their economies, save jobs and businesses in the worst in the new history crisis caused by the coronavirus pandemic. The country-specific recommendations were reoriented to address the new priorities of mitigating the socio-economic impact of the crisis and facilitating recovery, with the long term priorities in mind.

The guidance to the countries in the bloc are focused on one hand to the immediate fiscal, economic, employment and social responses to the crisis, with specific emphasis on health related aspects. On the second hand, it looks at the medium-term reform and investment priorities to put the economies back on track to growth, sustainable and inclusive, while integrating the green transition and the digital transformation. The fiscal sections of the concrete recommendations have also been adapted to take into account the activation of the general escape clause of the Stability and Growth Pact.

The guidance to each of the EU states adopted in previous cycles of the Semester, prior to the onset of the coronavirus pandemic, also covered reforms that are essential to address medium to long-term structural challenges. They remain pertinent and will continue to be monitored throughout next year's European Semester annual cycle.

The recommendations that should be adopted by the Council as well, cover the four dimensions of competitive sustainability - stability, fairness, environmental sustainability and competitiveness and include areas such as investing in public health and resilience of the health sector, preserving employment through income support for affected workers, investing in people and skills, supporting the corporate sector (in particular small and medium-sized enterprises) and taking action against aggressive tax planning and money laundering. Recovery and investment must go hand-in-hand, reshaping the EU economy faced with the digital and green transitions, the document reads.

The fiscal recommendations this year are qualitative, departing from the budgetary requirements that would normally apply. They reflect the activation of the general escape clause, recommending that Member States take all necessary measures to effectively address the pandemic, sustain the economy and support the ensuing recovery. When economic conditions allow, fiscal policies should aim at achieving prudent medium term fiscal positions and ensuring debt sustainability, while enhancing investment.

As a coordinated European economic response is crucial to relaunch economic activity, mitigate damage to the economic and social fabric, and to reduce divergences and imbalances, the European Semester of economic and employment policy coordination constitutes a crucial element of the recovery strategy.

Commenting on the new package, Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People, stated that the coronavirus “has hit us like an asteroid and left a crater-shaped hole in the European economy”. This Spring semester package has been recast and streamlined to provide guidance to our Member States as they navigate their way through the storm, he urged. “For this immediate phase, our focus is on investing in public health and protecting jobs and companies. As we shift to the recovery, the Semester will be essential in providing a coordinated approach to put our economies back on the track to sustainable and inclusive growth - no one should be left behind. We also need reforms to improve productivity and the business environment. Once conditions allow, we will need to strike a balance between achieving fiscal sustainability while also stimulating investment,” EVP Dombrovskis explained.

Nicolas Schmit, Commissioner for Jobs and Social Rights, underlined that supporting workers, reinforcing social protection, fighting inequalities and guaranteeing people the right to develop their skills will be top priorities for our economic response to the crisis, as well as to ensure inclusive green and digital transitions. We can only achieve this together. The European Pillar of Social Rights remains our compass in these endeavours. The post-coronavirus recovery must foster resilience and upward convergence by putting people at the centre, he said.

The coronavirus pandemic and the necessary containment measures have dealt a brutal blow to Europe's economies, Paolo Gentiloni Commissioner for Economy, pointed out, noting that these recommendations reflect that unprecedented situation. “The priorities today are to strengthen our healthcare, support our workers, save our businesses. Yet the challenges we faced before this crisis have not gone away. So as we look to the future, our investment and reform objectives must remain focused on making a success of the green and digital transitions and ensuring social fairness. That also means everyone must pay their share: there can be no place for aggressive tax planning in a Europe of solidarity and fairness,” Commissioner Gentiloni asserted.

The Commission has also adopted reports for Member States that are themselves planning – for reasons related to the coronavirus - or are forecast by the Commission, to breach the 3% deficit limit in 2020. The reports for France, Belgium, Cyprus, Greece, Italy and Spain also assess these Member States' compliance with the debt criterion in 2019, based on confirmed data validated by Eurostat.

Taking into consideration the negative impact of the coronavirus pandemic on national public finances, in these reports the Commission considers that at this juncture a decision on whether to place Member States under the excessive deficit procedure should not be taken. 

 

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