European Council Conclusions: The future of the European Semester in the context of the Recovery and Resilience Facility

European Union post-Covid19: On 9 November 2021, the Council adopted conclusions on the future of the European Semester in the context of the Recovery and Resilience Facility.

Among conclusions, Council remarks the following:

In 2020, the framework for the annual coordination of economic, fiscal and employment policies across the European Union known as the European Semester was temporarily adjusted due to the COVID-19 pandemic towards addressing the negative health and socio-economic consequences.

New economic circumstances and the European response to the COVID-19 crisis caused a temporary adjustment of the European Semester also in 2021 with policy guidance focusing solely on fiscal policies, as the attention was put on the preparation, adoption and implementation of the Recovery and Resilience Plans.

The adjustment of the European Semester in 2020 and 2021 including on fiscal guidance contributed to the coordination of policy actions to effectively address the pandemic, sustain the economy and support a sustainable recovery.

Council agrees that also during this exceptional period, the European Semester proved to be a credible and flexible framework for the EU economic, fiscal and employment policy coordination.

The European Semester and the Recovery and Resilience Facility should continue, without duplications, to tackle the crisis’ impact and to contribute to strengthening economic resilience and sustainable, dynamic and inclusive long-term growth, thus enhancing convergence among the EU economies.

Risks and challenges

Council stresses that the European Semester should continue to ensure comprehensive surveillance of fiscal, financial, economic and employment policies, and it should closely monitor remaining and evolving risks and challenges, detect policy gaps, and ensure their follow-up

The European Semester should pay particular attention to the green and digital transition, which must be a key driver in the recovery; it should promote sustainable economic growth, well-functioning labour markets and social inclusion.

European Council calls for a swift return to the core elements of the European Semester in the 2022 cycle, especially reinstating country reports and country-specific recommendations. underlines the need to take into account the ongoing recovery process, the related uncertainties and the implementation of the Recovery and Resilience Facility.

That country-specific recommendations should focus on a comprehensive range of challenges concerning economic, fiscal and employment policies, including those with large spillovers.

Multilateral reviews

Council recalls also that multilateral surveillance and the related peer reviews remain central in the EU economic policy coordination under the European Semester. In this sense, underlines that high-quality Commission analysis and policy recommendations are key for efficient multilateral reviews and subsequent national policy action.

It also remarks the importance of continued monitoring of the implementation of country-specific recommendations under the European Semester and the communication of the annual assessment of the implementation progress.

Regular stocktaking at the EU level and related peer reviews remain crucial for promoting reform implementation. NOTES that it may require several years to effectively implement major structural reforms, and therefore recalls the possible benefits of issuing policy recommendations on structural economic policies less frequently than annually, combined with an annual assessment.