EU’s spring-2022 Semester: optimal coordination of states’ development

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Generally, the European Semester’s main purpose is to provide broad socio-economic policy coordination among Union’s member states; however, present spring-2022 cycle is coped with the implementation of the Recovery and Resilience Facility (RRF) requirements. The RRF’s implementation is necessary for adapting the Semester in taking into account joint EU-states’ efforts focusing on the delivery of national recovery and resilience plans (NRRPs). Besides, this Semester cycle includes report on the EU-27 states’ progress in achieving the SDGs.

This year’s spring package reintroduces country reports and country-specific recommendations (CSRs), procedures that were abandoned for about two years due to corona-pandemic. The CSRs in 2022 provide analysis of the EU states’ efforts in competitive sustainability and progress in national recovery-resilience programs.
The EU institutions are going to “equip” national economies with the “growth patterns for the future”, i.e. by making the economies more resilient through green and digital transitions.
Thus, the CSRs adopted in the context of the European Semester provide guidance to the EU member states concerning optimal and coherent national response to existing and new challenges and deliver on their key socio-economic policy objectives: in 2022, it includes an energy-related recommendation to all EU states addressing major challenges such as security of supply, EU´s energy independence and climate change – offering targeted guidance for each EU state on reducing the dependency on fossil fuels in line with the REPowerEU objectives. The REPowerEU addresses also the 2022 country-specific recommendations related to energy challenges. The CSR’s implementation coped with the national recovery-resilience plans will drive the member states’ reform and investment agendas for the years to come.
It is known that REPowerEU is a European program to end as soon as possible regional dependency on Russian fossil fuels, rapidly proceed along the clean-green transition and achieve a more resilient energy system within a genuine European Energy Union.
The EU is heavily reliant on fossil fuels: about 90% of gas used in the EU is imported, with Russia providing almost half of these volumes in 2021.
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Most vital recommendations:
= Generally, the outcomes of the spring-22 semester include several recommendations to the member states on the following main issues: a) on fiscal policy, including fiscal structural reforms, where it is necessary; b) on the implementation of the RRP and the cohesion policy programs; c) on energy policy in line with the objectives of REPowerEU and the European Green Deal; and d) where relevant, an additional recommendation on outstanding and/or newly emerging structural challenges.
In terms of RRF disbursements, the Commission has already paid the states about €100 billion to carry out their reforms and fulfill their necessary investments.
Two European Commissioners (V. Dombrovskis and P. Gentilone) underlined on the occasion of the Semester, that Russian invasion of Ukraine continued “to shock the world; Europe’s geopolitical and economic landscape has changed dramatically”. The invasion has aggravated global and regional value supply chains, which correspondingly is both driving higher inflation and creating enormous uncertainty in states’ socio-economic development. As a result, EU citizens are being worried about rising living costs and growing prices on essential goods and services; in part the whole EU-27 economy has been hit hard.
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= On social and employment guidance
Analysis and updating the EU employment guidance is part of the Semester’s accounts and recommendations to states with strong focus on making the green transition socially fair, as well as on dealing with the social impact of Russia’s invasion of Ukraine.
The social dimension, social dialogue and the active involvement of social partners have always been at the core of a highly competitive European social market economy. The new EU headline targets on jobs, skills and poverty reduction and the revised Social Scoreboard proposed in the European Action Plan will help to facilitate progress towards implementation of the Social Pillar principles, taking into account different national circumstances and a coordination framework in the context of the European Semester.
For example, the following recommended measures for the states’ growth are involved: – supporting people who flee the war, in terms of labour market access and social integration; – supporting vulnerable households given the increase in energy prices and cost of living; – addressing labour shortages and skills mismatches through skills and learning policies; and – meeting EU targets on employment, skills and poverty, as agreed at the Porto Summit in 2021.
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National socially oriented fiscal policies should expand public investment both for green and digital transition, and for energy security; such investment directions require not only financing but also reforms to ensure their swift and effective delivery, i.e. broadly, to embed them in a context of inclusive and sustainable economic development. NextGenerationEU program, and in particular its Recovery and Resilience Facility, remains the EU’s most powerful tool for delivering these investments and reforms, which are designed at national level and aimed to address common EU-wide priorities.
That’s why full and timely implementation of national recovery and resilience plans, NRRPs is so important for the wellbeing of the EU citizens; their effective implementation and that of the REPowerEU program should also help to drive gradual improvement in states’ socio-economic growth patter patterns.

= On macroeconomic imbalances
Based on 12 EU states’ assessed as part of in-depth reviews, macroeconomic imbalances are gradually falling back, though private and public debt levels are declining from high levels. Current accounts are rebalancing, but the pandemic’s impacts are not yet fully absorbed and new risks are increasing: thus, house prices, for example, continue to rise in a number of EU states.
For 10 EU states the Commission “reconfirmed the 2021 assessment; while Greece, Italy, and Cyprus continue to experience excessive imbalances.
Germany, Spain, France, the Netherlands, Portugal, Romania and Sweden continue to experience imbalances; however, Ireland and Croatia are no longer experiencing imbalances (Croatia aims to adopt the euro as its currency in January 2023).
The budget deficit criterion (3%) is not fulfilled by 17 EU states: Belgium, Bulgaria, Czechia, Germany, Estonia, Greece, Spain, France, Italy, Latvia, Lithuania, Hungary, Malta, Austria, Poland, Slovenia and Slovakia. Taking into account all relevant factors, the Semester’s report finds that the public debt criterion (60%) is not fulfilled by Belgium, France, Italy, Hungary and Finland.
Growth in the Union in 2022 is expected to be the lowest in decades –just 0,8 percent., which shoes that the EU is in the period of severe economic downturn. That means that national fiscal policies have to react quickly to existing “evolving risks” in unpredictable times.
The EU institutions have previously estimated additional investments of about €650 billion per year up to 2030 for the twin transition, of which €520 billion is for the green transition alone. However, it seems that these amounts are lower than the present actual needs, partly as a consequence of investing in energy critical conditions due to Russian invasion of Ukraine: thus, in delivering the REPowerEU objectives the states would require additional investment of €210 billion between up to 2027.
On EU-27 economic forecast in:

= On SDGs. The EU made progress towards most of the UN sustainable development goals (SDGs): 14 out of 17 SDGs have been assessed during last five years through available data. The EU-27 continued to make sufficient progress towards in such goals as: – fostering peace and personal security in the member states and improving access to justice and trust in institutions (SDG 16); – reducing poverty and social exclusion (SDG 1); – in economy and the labour market (SDG 8).
The assessment of EU progress in such goals as, e.g. on partnerships (SDG 17), clean water and sanitation (SDG 6) and life on land (SDG 15) has been broadly neutral, meaning they were generally characterised by an almost equal number of sustainable and unsustainable features in national development.

Finally, the Commission calls on the European Council to endorse and on the Council to adopt the Commission Semester proposals for the 2022 and the national recommendations on CSRs. The Commission also calls on the EU-27 member states to implement the recommendations fully and in a timely manner, in close dialogue with the national social partners, civil society organisations and other stakeholders at all levels.
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