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The European economy has come out of recession and, according to our latest forecast, it maintains the course of a moderate recovery. Employment and domestic demand have been gradually improving, although investment has grown at a slower pace compared to past recoveries. The strengthening of domestic demand and gradually reduced reliance on external demand supported the resilience of the economy.
Our Winter Economic Forecast shows 1.9% growth for the EU and 1.7% growth for the euro area. The implementation of policies has helped to restart the economy and the recovery is also supported by external factors. Monetary conditions are set to remain highly accommodative and fiscal policy is also considered to be broadly neutral, or even according to ECB assessment - slightly expansionary.
Yet, this recovery remains fragile. Unfortunately, today we have more reasons for concern than a few months ago. The external environment has deteriorated and we have seen a marked increase in financial market volatility and in risk aversion. [...]
We will publish our annual country reports on 24 February. They will show that Member States have been tackling structural shortcomings, but at an uneven pace. We have seen a slowing down of reforms as market pressure has eased.
A number of Member States still need to carry out genuine reforms in many areas to unlock Europe's growth potential so we can be better prepared for new challenges and risks. [...]
We see that, gradually, the European Semester takes a more central role, also in domestic policy debates on fiscal and macroeconomic challenges. We are continuously striving to improve in further, not least by keeping it focused.
Yet, the record of implementation on the country-specific recommendations is mixed. [...]
The role of the European Parliament and national parliaments is absolutely critical here. The role of national parliaments in particular needs to evolve to become more intensively and more regularly involved in the process at national level, in line with national practices. [...]
Let me now move to the main elements of the economic strategy for the 2016.
The Commission has put growth, convergence and stability at the heart of our economic policy. The three main policy priorities, endorsed also by the European Council, are:
Reviving investment;
Pursuing structural reforms to boost productivity and competitiveness; and
Ensuring sustainable public finances.
[..] To support Member States in this respect, we have also proposed a comprehensive European Structural Reform Support Programme with a dedicated budget. [...]
In line with the Five Presidents' Report on Completing the Economic and Monetary Union, we have also made the euro area dimension - and related policy challenges - more prominent.
For the first time, we have published the euro area recommendations at the beginning of the European Semester - in November and together with the Annual Growth Survey - rather than at the end, per our previous practice. This new timing has opened up the possibility for a more lively debate than in the past. It will also ensure that common euro area concerns are fully reflected in the country-specific recommendations for euro area Member States in May.
The five recommendations for the euro area highlight the need for further structural reforms, sound public finances, measures to address macroeconomic imbalances, reduce private and public debt, and for deepening EMU. [...]