10 December 2013

ECOFIN Council results: Macro-economic imbalances / AMR / AGS / Economic partnership programmes

The European Council will assess the main areas for coordination at its meeting on 19 and 20 December.

The Council was briefed by the chairman of the EFC on a pilot project carried out recently on the ex-ante coordination of major economic reform plans. It will again discuss the alert mechanism report and the annual growth survey at its meetings on 18 February and 11 March respectively. As concerns the coordination of economic policies and reforms and the pilot project, the presidency will write to the president of the European Council on the outcome of the Council’s discussion.

Macro-economic imbalances: Alert mechanism report

The Commission's report (15808/13) identifies, on the basis of a scoreboard of economic indicators, Member States that may have an imbalance that could hinder the smooth functioning of the European economy and the EU's monetary union.

The report, published by the Commission on 13 November, calls for in-depth reviews of the situation in 16 Member States, two more than last year. These are: Belgium, Bulgaria, Denmark, Germany, Spain, France, Croatia, Italy, Hungary, Luxembourg, Malta, the Netherlands, Slovenia, Finland, Sweden and the United Kingdom2.

In the previous macroeconomic imbalances procedure:

• Spain and Slovenia were found to be experiencing excessive imbalances. The forthcoming in-depth review will therefore assess the persistence or unwinding of these imbalances, and the contribution made by the two countries' policies;
• France, Italy and Hungary were found to be experiencing imbalances and the Commission recommended decisive policy actions. The in-depth review will assess the persistence of these imbalances;
• Belgium, Bulgaria, Denmark, Malta, the Netherlands, Finland, Sweden and the UK were found to be experiencing imbalances. The review will therefore assess the extent to which those imbalances persist or have been overcome.

For Germany and Luxembourg, the in-depth reviews will examine their external position and internal developments, and conclude whether they are experiencing excessive imbalances.

For Croatia, the review will examine the nature and potential risks related to its external position, trade performance and competitiveness, as well as internal developments.

This is the third annual report on application of regulation 1176/11 on the prevention and correction of macro-economic imbalances. Regulation 1176/11 is one of the "six-pack" of economic governance measures adopted in November 2011 to ensure a smoother functioning of the EU's monetary union. It introduced the possibility of imposing fines if euro area member states are found to be in an "excessive imbalance position" and repeatedly fail to comply with the Council's recommendations.

Annual growth survey

The Commission's survey (15803/13) outlines priority actions to be taken by member states in order to ensure better coordinated and more effective policies for fostering sustainable economic growth.

The challenge for Europe's economy is to sustain the recovery that is now underway. With growth beginning to return and member states making progress in correcting the imbalances that developed before the crisis, the survey maintains its focus on the following five priorities:

• Pursuing differentiated, growth-friendly fiscal consolidation;
• Restoring bank lending to the economy;
• Promoting growth and competitiveness for today and tomorrow;
• Tackling unemployment and the social consequences of the crisis;
• Modernising public administration.

The annual growth survey constitutes the starting point for the European Semester, which involves simultaneous monitoring of the member states' economic, employment and fiscal policies during a six-month period every year.

The European Semester was organised for the first time in 2011, introduced as part of a reform of economic governance with the aim of ensuring a smoother functioning of the EU's monetary union.

In March, the European Council will assess implementation of country-specific recommendations made under the 2013 European Semester and will provide guidance for 2014.

Economic partnership programmes

The Council adopted opinions on economic partnership programmes presented by Spain, France, Malta, the Netherlands and Slovenia, describing policy measures and structural reforms that are planned to ensure an effective and lasting correction of their excessive deficits.

Malta submitted an economic partnership programme after the Council opened an excessive deficit procedure in June. Spain, France, the Netherlands and Slovenia submitted programmes after the Council extended the deadlines for correcting their deficits, also in June.

The presentation of economic partnership programmes stems from a new requirement for euro area countries introduced in May 2013 under the so-called two-pack economic governance legislation. It stems from the recognition that excessive government deficits may be partially rooted in structural weaknesses, and that budgetary measures alone might be insufficient to ensure a lasting correction of an excessive deficit.

Under the new rules, a euro area Member State must present an economic partnership programme upon entering an excessive deficit procedure or undertaking a new step in an existing procedure.

Full results

© European Council