The Commission has presented its communication on enhancing the coordination of economic policy in the European Union. The main components:
An alert system, including a set of indicators revealing external and internal imbalances combined with qualitative expert analyses. Alert thresholds will be defined and announced for each indicator. In particularly serious cases, the Commission would recommend placing the Member State in an “excessive imbalances position”.
An enforcement mechanism – a Member State in “excessive imbalances position” would be subject to stricter surveillance. The Council would issue policy recommendations; more stringent rules would apply to euro area Member States. By end-September, the Commission will make formal proposals for secondary legislation establishing a framework for dealing with excessive imbalances.
Thematic structural reform surveillance – this surveillance will be carried out in accordance with Article 121 and 148 TFEU and on the basis of the Europe 2020 Integrated Guidelines. . Based on Member States’ National Reform Programmes the Commission will assess the way each country has addressed the bottlenecks it has identified and how it is progressing towards its national Europe 2020 targets.
Reforms of national fiscal frameworks – including fiscal rules and credible enforcement mechanisms; multi-annual budgetary planning.
Enforced Stability and Growth Pact – requirement for Medium-Term budgetary objective (MTO) for Member States with a level of debt or pronounced risks in terms of future debt developments; a clear and simple numerical benchmark for defining a satisfactory pace of debt reduction.
Appropriate sanctions and incentives – an interest-bearing deposit for euro area Member States; ex-ante conditionality linking disbursement of cohesion policy support to structural and institutional reforms; reduction of EU funds payment to Member States or payments for which Member States act as an intermediary (end beneficiaries should not be affected).
The coordination cycle – complementarity of national budgets will be ensured at European level through policy guidance before final decisions on the budget for the following year are taken in Member States. The so-called European Semester will start with an “Annual Growth Survey” prepared by the Commission. By February the European Council provides strategic guidance on policies, which is taken into account by Member States in their Stability and Convergence Programmes (SCPs) and National Reform Programmes (NRPs)which will be submitted in April. The Council issues country-specific policy guidance in early July. In the second part of the year, Member States finalise national budgets. The European Semester will cover all elements of economic surveillance, including policies to ensure fiscal discipline, macroeconomic stability, and to foster growth, in line with the Europe 2020 strategy.