A year into its existence, the Recovery and Resilience Facility finds itself closely wed to the European Semester. It is a difficult marriage, but it is a marriage made to last.
Any debate on the
future of the Semester will take place against the backdrop of the RRF
experience. And any future fiscal capacity at the EU level will not come
without a Semester-style reform leg. It is therefore crucial to make
this marriage work.
In this policy brief, Nils Redeker and Thu Nguyen argue that
this requires three things: 1) scaling back recommendations under the
regular Semester, 2) balancing out the asymmetric powers that the
Commission now has over different member states, and 3) striking the
right balance between flexibility and enforcement of agreed plans.
Introduction
A year into its existence, the European Union’s (EU) new Recovery and Resilience Facility (RRF) finds itself closely wed with the European Semester.
Recommendations for economic reforms issued under the Semester have
become a central feature of RRF conditionality, reporting processes for
both procedures are now interlinked, and supervising implementation of
national Recovery and Resilience Plans (NRPPs) will be the Semester's
key task up to 2026.
This new marriage will not be easy. Over the coming years, the RRF
will add teeth to the European Semester but could also replicate some of
its long-standing flaws. Either way, this marriage will have a lasting impact on the ongoing debates on the future of EU economic governance rules:
It is a marriage made to last. Any discussion on possible reforms of
the European Semester will now have to take into account the prospect
that an RRF-like procedure could well be replicated in the next crisis.
And any potential large-scale fiscal capacity at EU level will almost
certainly come with a Semester-style reform leg.
It is therefore crucial to make this marriage work.
This paper argues that this requires three things: First, scaling back
recommendations under the regular Semester in the years to come. Second,
making a conscious effort to balance out the asymmetric powers that the
Commission now has over different member states. And third, striking a
delicate balance between flexibility and enforcement of agreed plans.
Here we briefly sketch out how the RRF is integrated into the European
Semester and recommend some guiding principles in making it happen as
the marriage unfolds.
How the marriage works and why it matters: Integrating the Recovery and Resilience Facility into the European Semester
The European Semester serves to address a central conundrum of the
EU: national social, economic, labor market and social policies have a
big impact on the EU as a whole. At the same, the EU has little to no
say in these policy areas. With the Semester, the EU attempts to address
this issue by providing a framework for surveillance and coordination.
This is anchored in a set of rules on how to keep budgets in check and
address economic imbalances in the EU; its main output is a series of
reform recommendations for each member state, which the Commission lays
down each year.
A central point of criticism has always been that the
Semester lacks credible sticks or carrots to incentivize compliance with
its recommendations. The RRF now changes this.
To tap into the €723.8 billion (in current prices) in grants and
loans available under the RRF, member states must develop national
recovery and resilience plans (NRRP). These rest on two legs. On the one
hand, NRRPs must set out in detail milestones and targets on specific
investments that will be financed by RRF money. On the other hand, the
plans must outline economic reform plans that “effectively address all
or a significant subset of challenges identified in the relevant
country-specific recommendations” (CSRs) of the European Semester. On
this basis, member states can then, up to twice a year, ask for payments
as soon as the relevant milestones and targets outlined in the NRRPs
have been reached. Only if the Commission is satisfied with the
progress made does it grant the payment request after an opinion of the
Economic and Financial Committee.
full article
Jacques Delors Centre
© Jacques Delors Centre
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article