Commission urge Member States to accelerate economic reforms

Commission on Monday warned governments across the bloc to do more to reform their economies to prevent a rerun of problems that fueled the region’s debt crisis and nearly destroyed the euro currency union....

The concern is that some countries, in particular France and Italy, are not moving fast enough to reduce their budget deficits. European Union officials have already granted France extra time to meet the targets that all member countries have agreed to....

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Remarks by President Barroso on the Country Specific Recommendations 2014

Press conference, Brussels, 2 June 2014:

".........The Commission has today adopted its yearly set of country-specific recommendations. Now in their fourth year, this dialogue of economic governance is the way to help guide the EU firmly out of the crisis and back to growth. This dialogue between the Commission and the Member States has become a real focal point in the EU's economic calendar.

We have also adopted decisions for 8 countries under the Stability and Growth Pact, which Vice-President Rehn will explain later.

In general terms, the positive results of this EU-wide strategy for reform are becoming evident. 

Growth has returned.

Employment is set to rise from this year onwards, albeit slowly, since there is usually a time lag before growth translates into jobs. 

Financial markets have stabilised.

And public finances are today much healthier: the number of countries in the Excessive Deficit Procedure has dropped to 11, from 24 at the height of the crisis.

But the recovery is fragile, and we are not yet where we want to be, especially given record high levels of unemployment. More effort will be required to lift Europe firmly out of the crisis and get back to solid growth.

Our priority is clear: growth and jobs. What the European citizens want from us is clear: they want results, concrete results. More action is needed.

That's why the fundamental challenge for next year is political: How do we keep up the momentum for reform in the EU without the pressure of the crisis bearing down on us?

This set of recommendations goes some way to answering that question. Through these recommendations the Commission is pointing out practical ways for Member States to strengthen the recovery.

Priority number one is to tackle the severe and lasting effect the crisis has had on employment. Unemployment remains dramatically high, at 10.8% on average in 2013, with young people and the long-term unemployed facing severe difficulties. That's why we have addressed recommendations to 13 countries this year urging them to do more to help people enter or go back to the job market through more tailored job-search assistance, education and training, and to favour quality jobs.

• For 8 countries we have made specific recommendations related to the Youth Guarantee.

• And to fight poverty and social exclusion, the Commission is putting a particular focus on unemployment benefits and social assistance in 8 of our Member States.

• Secondly, and as importantly, we must find ways to boost investment. Public finances are stretched very thin, with debts above 100% of GDP in Belgium, Ireland, Greece, Spain, Italy, Cyprus and Portugal. But debt reduction should not come at the expense of growth-enhancing public investment in education, research and innovation. We have put the emphasis on this in at least 6 Member States' country-specific recommendations.

We are also under pressure to manage the costs of ageing, particularly pensions and healthcare, an issue which we have highlighted in 19 Member States.

To help bolster public finances, but also to encourage job creation, we are putting a special focus this year on shifting taxation away from labour to more recurrent property, consumption and environmental taxes, which we have recommended to 12 countries. Strengthening tax compliance and fighting fraud will also bring in much-needed revenues. The issue of taxation is an area where Member States, and also the European level, have to do more.

Critically important is the need to relaunch private investment. For this to happen, other decisions beyond fiscal policy are needed. This requires the issue of financial fragmentation in the EMU to be addressed.

More attention should be given to other instruments that have already been prepared at EU level, for example, project bonds or the possibility of blending structural funding with EIB loans.

It also means cleaning up any remaining black holes in the banking sector and promoting access to finance, especially for SMEs. This is an issue that we have identified concretely in 11 member states.

Last, but by no means least, we need to step up structural reforms to make our economies more competitive. There has been too little progress since last year on reforms to promote competition in the service sector, which is why we have recommendations for 14 countries in 2014. On network industries, such as energy and transport, we are making recommendations to 17 member states. And we are advising 8 countries to do more to boost research and innovation.

I would like to highlight this important point. There were already several European Council meetings where EU leaders committed to do more to implement and deepen the internal market. We have identified this clearly as one of the challenges. Unfortunately, those commitments have not yet taken a concrete nature. We still are lagging behind many of our competitors when it comes to the internal market.

• With these recommendations, the Commission is pointing the way forward. We believe that Member States must now play their part in seeing these reforms through, even if we know that sometimes they are politically unpopular. There are reforms to do at national level, and there are decisions that we can take and implement at European level.

• We will closely follow up on progress, particularly in those countries that have been given more detailed deadlines: France, Italy, Spain, Slovenia, Ireland, Portugal, Croatia and Hungary.

Only by working together under the European Semester - this collective exercise of dialogue between the European Union institutions and the Member States - can we deliver a stronger recovery. This is what citizens are asking of us. They want results, they want growth and jobs, and we owe it to them to step up our efforts...."

[europa.eu]

2/6/14