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179-481: The European Semester has evolved over the years with a gradual inclusion of social, economic, and employment objectives and it is governed by mainly three pillars which are a combination of hard and soft law due a mix of surveillance mechanisms and possible sanctions with coordination processes. The main objectives of the European Semester are noted as: contributing to ensuring convergence and stability in

358-470: A "2024 National Reform Programme" and "2024 Stability or Convergence Programme" analyzed, with a compliance check of the 2023 fiscal result and 2024 budget with the existing 2019-version of the SGP rules, although only 3% deficit breaches will be evaluated because no debt limit or debt reduction breach can trigger an EDP in 2024. The European Commission reasoned for its continued deactivation for another year of

537-423: A "2024 National Reform Programme" and "2024 Stability or Convergence Programme" analyzed, with a compliance check of the 2023 fiscal result and 2024 budget with the existing 2019-version of the SGP rules; although only 3% deficit breaches will be evaluated - because no debt limit or debt reduction breach can trigger an EDP in 2024. The European Commission reasoned for its continued deactivation for another year of

716-442: A "3‑year backward looking period based on cyclical adjusted data". If any of the periodic checks conducted by the national fiscal council finds the budget or estimated fiscal account of the general government to be noncompliant with the deficit or debt criteria of the treaty, the state is obliged to immediately rectify the issue by implementing sufficient counteracting fiscal measures or changes to its ongoing fiscal policy for

895-425: A 126(6) report; and a deadline for the needed correction of the criteria breach - along with annual targets for the structural deficit and nominal budget balance - will be set by the simultaneous adoption of a 126(7) report. The EDP - also known as the corrective arm of the SGP, was however suspended via activation of the "general escape clause" during 2020-2023 to allow for higher deficit spending ; first due to

1074-597: A budgetary imbalance created before 2020. The data in the table below are from the ordinary compliance check of all EU member states in May 2023, with outturn data for the 2022 fiscal year as they were published on the Eurostat website in April 2023, and budget values for 2023-2026 as they were reported by the submitted Stability programme or Convergence programme of each member state in April 2023. 16 out of 27 member states had

1253-506: A budgetary imbalance created before 2020. 16 out of 27 member states had a technical SGP criteria breach , when their 2022 fiscal results and 2023 budgets were analyzed in May 2023; because those breaches were exempted due to the finding of temporary and exceptional circumstances, reflected by the activation of the general escape clause, no new EDPs were opened against those member states. The EDP will be assessed again starting from 19 June 2024, where each country will have their usual set of

1432-410: A common currency area. The additional regulations complement the SGP's requirement for surveillance, by enhancing the frequency and scope of scrutiny of the member state's policymaking, but do not place additional requirements on the policy itself. The degree of surveillance will depend on the economic health of the member state. Regulation 473/2013 is directed at all eurozone member states and requires

1611-422: A common time-based framework as well as to facilitate and harmonize their national budgetary, growth and employment policy goals, while taking into consideration various EU set of targets. The European Semester was meant to boost and improve the national strategies towards more fiscal, economic, employment and social policy coordination. It is based on different acts as well as on actions and development plans such as

1790-681: A comparison with the Commission forecasts. Any differences will have to be explained and justified. The programme contains more precisely budgetary and fiscal assumptions for 3 years such as the planned deficit, the level of indebtedness and some macroeconomic scenarios. The commission publishes and sends to the Council its proposal of recommendation in view of the adoption of the Country-specific recommendations (CSRs). The documents contains policy guidelines for each country. It states

1969-462: A comprehensive reform of the EU fiscal framework: The proposed reform aims to strengthen public debt sustainability, promote sustainable and inclusive growth through reforms and investments, increase national ownership for fiscal plans and fiscal corrections, simplify the legal framework, move towards a greater medium-term approach to budgetary policies, and ensure more effective and coherent enforcement of

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2148-421: A country does not reach its MTO, it is required in the subsequent year(s) to implement annual improvements for its structural balance equal to minimum 0.5% of GDP, although several sub-rules (including the "expenditure benchmark") has the potential slightly to alter this requirement. When Member States are in this process of improving their structural balance until it reaches its MTO, they are referred to as being on

2327-487: A country-specific Medium-Term budgetary Objective (MTO). The Fiscal Compact however introduced a more strict upper MTO-limit compared to SGP, as it now at most can be set to 0.5% of GDP for states with a debt‑to‑GDP ratio exceeding 60%, while only states with debt levels below 60% of GDP will be subject to respect an upper MTO-limit at the SGP-allowed 1.0% of GDP. The exact applying country-specific minimum MTO

2506-405: A country-specific debt sustainability risk assessment, while also respecting the requirement that the annual improvements for the structural budget balance shall be minimum 0.5% of GDP. The treaty refers to that the compliance check and calculation of sufficiently required corrections for the debt-limit and "debt brake" criteria, shall be identical with the existing operating debt rules outlined by

2685-769: A debt level above 60% it should each year decrease with a satisfactory pace towards a level below. As outlined by the "preventive arm" regulation, all EU member states are each year obliged to submit a SGP compliance report for the scrutiny and evaluation of the European Commission and the Council of the European Union , that will present the country's expected fiscal development for the current and subsequent three years. These reports are called "stability programmes" for eurozone Member States and "convergence programmes" for non-eurozone Member States, but despite having different titles they are identical in regards of

2864-634: A detailed analysis of the challenges their economy face, as well as policy suggestions for tackling these challenges. The reports are also intended to provide the basis for a dialogue between the Member States and the European Commission under the form of bilateral meetings which follow their release. The country reports are important for States in view of the preparation of their National Reform Programmes as well as their Stability or Convergence Programmes. The European Council discusses

3043-467: A draft budgetary plan for the upcoming year to be submitted annually by 15 October, for a SGP compliance assessment conducted by the European Commission. The member state shall then await receiving the Commission's opinion before the draft budgetary plan is debated and voted for in their national parliament. The Commission will not be granted any veto right over the national parliaments potential pass of

3222-651: A fiscal budget, but will have the role to issue warnings in advance to the national parliaments, if the proposed draft budget is found to compromise the debt and deficit rules of the SGP. Regulation 472/2013 is concerned with the subgroup of eurozone member states experiencing or being threatened by financial instability, which is understood to be the case if the state has an ongoing Excessive Imbalance Procedure (EIP) or receives any macroeconomic financial assistance from EFSM / EFSF / ESM / IMF /other bilateral basis. These member states are made subject to even more in depth and frequent "enhanced surveillance", in order to prevent

3401-427: A fiscal council), with a mandate to verify all statistical data and fiscal budgets of the government are in compliance with the agreed fiscal rules, and ensure the proper functioning of the automatic correction mechanism. The treaty defines a balanced budget exactly the same way the SGP did, as a government budget deficit not exceeding 3.0% of the gross domestic product (GDP), and a structural deficit not exceeding

3580-449: A formalisation of the situation. EU integration is not always symmetrical, with some states proceeding with integration ahead of hold-outs. There are several different forms of closer integration both within and outside the EU's normal framework. One mechanism is enhanced cooperation where nine or more states can use EU structures to progress in a field that not all states are willing to partake in. Some states have gained an opt-out in

3759-607: A greater or lesser extent. If an aspect is not listed in the table below, then it remains the exclusive competence of the member state. Perhaps the best known example is taxation, which remains a matter of state sovereignty. As a result of the European sovereign debt crisis , some eurozone states were given a bailout from their fellow members via the European Financial Stability Facility and European Financial Stability Mechanism (replaced by

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3938-583: A key tool of the NextGenerationEU Plan , the Recovery and Resilience Facility emerged as a financial support for member states through loans and grants. The European Council decided to use some of the existing EU macro-economic instruments to facilitate the implementation and the management of the Recovery and Resilience Facility, notably the EU budget but also the European Semester. Consequently,

4117-518: A low-inflation policy, which had been an important part of the German economy's robust performance since the 1950s. The German government hoped to ensure the continuation of that policy through the SGP, which would ensure the prevalence of fiscal responsibility, and limit the ability of governments to exert inflationary pressures on the European economy. As such, it was also described to be a key tool for

4296-404: A member state will be declared to be in abeyance with the debt brake rule. Otherwise the Commission will declare existence of an "apparent breach" of the debt-criterion by the publication of a 126(3) report , which shall investigate if the "apparent breach" was "real" after having taken a range of allowed exemptions into consideration. Provided no special "breach exemptions" can be found to exist by

4475-401: A monarch although political powers are exercised by elected politicians. Most republics and all the monarchies operate a parliamentary system whereby the head of state (president or monarch) has a largely ceremonial role with reserve powers . That means most power is in the hands of what is called in most of those countries the prime minister, who is accountable to the national parliament . Of

4654-417: A new "debt reduction rule" , commonly referred to as the "debt brake rule" , and legislatively referred to as the "1/20 numerical benchmark for debt reduction" . The new debt reduction rule entered into force at the EU level on 13 December 2011. If just one of the four quantitative debt-requirements (including the first one requesting the debt-to-GDP ratio to be below 60% in the latest recorded fiscal year)

4833-402: A new country applying from scratch. However, other studies claim internal enlargement is legally viable if, in case of a member state dissolution or secession, the resulting states are all considered successor states . There is also a European Citizens' Initiative that aims at guaranteeing the continuity of rights and obligations of the European citizens belonging to a new state arising from

5012-600: A permanent facility was created two years later with the establishment of the European Stability Mechanism (ESM). The latter consists of an international treaty signed on 2 February 2012 by Eurozone Members only. Ailing Members receive financial aid in the form of low-interest loans whose disbursement is attached policy conditionalities. The latter usually consist in Macroeconomic Adjustment Programs (MAPs) whose adoption

5191-570: A possible sovereign debt crises to emerge. In the post-crisis period, the legal debate on EMU largely focused on assessing the effects of both the Six- and the Two-Pack on the SGP. Most scholars admit that a considerable improvement occurred in the field of budgetary enforcement, especially for what concerns the imposition of dissuasive sanctions upon noncompliant Members. However, critical positions generally outnumber positive ones. Many have criticised

5370-656: A rapid erosion of public support for the EU , a significant re-balancing between social, economic, and employment objectives has been visible in the policy orientation of successive European Semesters. In the 2017 European Commission’s reflection paper on deepening the Economic and Monetary Union , the European Commission suggested that the Semester could be further reinforced by fostering cooperation and dialogue among member states at different levels to ensure and encourage stronger domestic implementation of reforms. It's

5549-481: A safety margin towards continuously respecting the government's 3% deficit limit" . The first part of this MTO, was interpreted by the Commission Staff Service to mean continuously achievement each year throughout the business cycle of a "cyclically-adjusted budget balance net of one-off and temporary measures" (also referred to as the "structural balance") at minimum 0.0% . In 2000, the second part

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5728-471: A slower adjustment path towards respecting the deficit and debt limit of the SGP, and extend the maximum duration of an Excessive Deficit Procedure from four to seven years if certain reform requirements are respected. The new revised rules will be finally adopted by the European Parliament and Council of Ministers before the 2024 European Parliament election ; and fully applied starting from

5907-538: A state must fulfil the economic and political requirements known as the Copenhagen criteria , which require a candidate to have a democratic government and free-market economy together with the corresponding freedoms and institutions, and respect for the rule of law . Enlargement of the Union is also contingent upon the consent of all existing members and the candidate's adoption of the existing body of EU law, known as

6086-441: A technical "SGP criteria breach" when their 2022 fiscal results and 2023 budgets were analyzed in May 2023, but because those breaches were exempted due to the finding of temporary and exceptional circumstances - reflected by the activation of the general escape clause, no new EDPs were opened against those member states. The EDP will be assessed again starting from 19 June 2024, where each country will have their usual set of

6265-420: A technical deficit-based "SGP criteria breach" as per their 2023 fiscal results published by Eurostat in April 2024. The European Commission will await receiving the budget values for 2024-2027 via the submitted Stability programme or Convergence programme of each member state, before deciding whether or not to open an EDP for the concerned member states. The 2024 SGP compliance table below will be updated with

6444-465: A template for the pro-EU regions of the UK remaining within the EU or its single market. Beyond the formal withdrawal of a member state, there are a number of independence movements such as Catalonia or Flanders which could result in a similar situation to Greenland. Were a territory of a member state to secede but wish to remain in the EU, some scholars claim it would need to reapply to join as if it were

6623-427: A temporary exceptional event outside its control with major budgetary impact, will be exempted from the requirement to deliver a fiscal automatic correction for as long as it lasts. The treaty states that the signatories shall attempt to incorporate the treaty into EU's legal framework, on the basis of an assessment of the experience with its implementation, by 1 January 2018 at the latest. In December 2017,

6802-540: Is also seen as an opportunity for the European Semester to become more effective, as this process makes the soft governance dimension of the European Semester harder. In sum, in 2022, the European Semester is to provide its economic and employment policy scope while adapting to the Recovery and Resilience Facility. With the EU’s strategy of competitive sustainability, further shifting of economic policy coordination has taken place in line with COVID-19 crisis challenges. This shift

6981-623: Is calculated as the difference between public spending and the potential GDP growth. Indeed, Regulation (EU) n°1175/2011 amending one of the two regulation constituting the Stability and Growth Pact states that the MTO shall be between -0,5% of the GDP and the equilibrium or exceeding it . All the Member states that haven't reach a certain reference rate of public spending (deficit) based on GDP growth in

7160-410: Is calculated by adjusting the achieved general government balance (in % of GDP) compared to each year's relative economic growth position in the business cycle (referred to as the " output gap "), which is found by subtraction of the achieved GDP growth with the potential GDP growth . So, if a year is recorded with average GDP growth in the business cycle (equal to the potential GDP growth rate),

7339-434: Is complied with: b t ≤ {\displaystyle \scriptscriptstyle \leq } 60% or b t ≤ {\displaystyle \scriptscriptstyle \leq } bb t or b* t ≤ {\displaystyle \scriptscriptstyle \leq } bb t or b t+2 ≤ {\displaystyle \scriptscriptstyle \leq } bb t+2 , then

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7518-429: Is deemed necessary to fix the imbalances which gave rise to the original instability. Bailout programs do not constitute enforcement procedure stricto sensu . However, since financial support always entails compliance with several budgetary and economic conditionalities, they can be construed as a sort of ex post enforcement mechanism. On 26 April 2023, the Commission presented three legislative proposals to implement

7697-415: Is delegated by each member to the institutions in return for representation within those institutions. This practice is often referred to as 'pooling of sovereignty'. Those institutions are then empowered to make laws and execute them at a European level. If a state fails to comply with the law of the European Union , it may be fined or have funds withdrawn. In contrast to some international organisations,

7876-678: Is expected to vote on the new Regulation on the preventive arm in April 2024. After the Parliament's approval, the Council of Ministers is expected to adopt the new Regulation, adopt the Regulation amending the corrective arm, and adopt the Directive amending the Directive on national budgetary frameworks. In the meantime, as a new legal framework is not yet in place, the current legal framework continues to apply in spring 2024. The reform

8055-610: Is issued by the Commission in June, then the EDP is expected to be formally adopted and opened by the Council in July. Across the first seven years, since the entry into force of the Stability and Growth Pact, all EU Member States were required to strive towards a common MTO being "to achieve a budgetary position of close to balance or in surplus over a complete business cycle – while providing

8234-610: Is no provision to expel a member state, but TEU Article 7 provides for the suspension of certain rights. Introduced in the Treaty of Amsterdam , Article 7 outlines that if a member persistently breaches the EU's founding principles (liberty, democracy, human rights and so forth, outlined in TEU Article 2 ) then the European Council can vote to suspend any rights of membership, such as voting and representation. Identifying

8413-529: Is recalculated and set by the European Commission for each country every third year, and might be set at levels stricter than the greatest latitude permitted by the treaty. In line with the existing SGP rules, the general government budget balance of a member state will be in compliance with the TSCG deficit criteria, either if its found to be within the country-specific MTO-limit, or if its found to display "rapid progress" on its "adjustment path" towards respecting

8592-639: Is superior to State law is subject to some debate. The treaties do not give a judgement on the matter but court judgements have established EU's law superiority over national law and it is affirmed in a declaration attached to the Treaty of Lisbon (the proposed European Constitution would have fully enshrined this). The legal systems of some states also explicitly accept the Court of Justice's interpretation, such as France and Italy, however in Poland it does not override

8771-435: The acquis communautaire . The United Kingdom , which had acceded to the EU's predecessor in 1973, ceased to be an EU member state on 31 January 2020, in a political process known as Brexit . No other member state has withdrawn from the EU and none has been suspended, although some dependent territories or semi-autonomous areas have left . There are a number of overseas member state territories which are legally part of

8950-608: The COVID-19 pandemic arriving as an extraordinary circumstance, and later during 2022-2023 due to the Russian invasion of Ukraine having sent energy prices up, defence spending up and budgetary pressures up across the EU. Despite the EDP suspension in 2020-2023, Romania still experienced the opening of an EDP in April 2020; but only because of existence of a deficit limit breach being recorded already for its 2019 fiscal year, which required corrective action across 2020–2024, to remedy

9129-502: The Commission can launch an investigation in a Member State that can lead to sanctions. For example, Spain got fiscal sanctions under that procedure because of the Autonomous Community of Valencia that had misrepresented its statistics. This pillar aims at monitoring and preventing the emergence of macroeconomic imbalances . In its annual Alert Mechanism Report, the Commission gives an assessment for each country on

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9308-554: The Commission to other European institutions : the Council , the European Central Bank , the European Parliament and to the European Economic and social committee . This report marks the beginning of the annual cycle of the macroeconomic imbalance procedure (MIP) in identifying and addressing the risks of macroeconomic imbalances in accordance with articles 3 and 4 of Regulation (EU) No 1176/2011 on

9487-494: The Council will recommend measures that the States shall take and the Commission will be in charge of closely monitoring their implementation. If there is no improvement, the Commission can publish a recommendation that publicly recognizes the non-compliance with the corrective measures. This will be automatically adopted by the Council unless a qualified majority of Member States oppose to it. The Commission may also recommend to

9666-445: The Council : It gives a detailed project of economic reforms that each country will implement. It also contains all the reforms the country has taken (and will take) to address the country recommendations of the previous years or simply the reforms that the country has taken regarding its own situation. This document contains also specific policies that the country will implement in order to strengthen employment and growth. Furthermore,

9845-556: The Covid-19 pandemic arriving as an extraordinary circumstance, and later during 2022-2023 due to the Russian invasion of Ukraine having sent energy prices up, defence spending up and budgetary pressures up across the EU . Despite the EDP suspension in 2020-2023, Romania still experienced the opening of an EDP in April 2020; but only because of existence of a deficit limit breach being recorded already for its 2019 fiscal year, which required corrective action across 2020-2024, to remedy

10024-595: The EU legal framework , all treaty provisions function as an extension to pre-existing EU regulations, utilising the same reporting instruments and organisational structures already created within the EU in the three areas: Budget discipline enforced by Stability and Growth Pact (extended by Title III ), Coordination of economic policies (extended by Title IV ), and Governance within the EMU (extended by Title V ). The full treaty applies for all eurozone member states. A voluntary opt-in for non-eurozone member states to be bound by

10203-404: The EU member states and demonstrated the need for an enhanced economic and fiscal governance. Prior to 2010, the EU member states ’ economic policies were coordinated separately and yet the member states’ economies were (and still are) closely interdependent under the Economic and Monetary Union. Therefore, the countries found it appropriate to coordinate their economic policy procedures under

10382-499: The European Commission a European commissioner . The commissioners do not represent their member state, but instead work collectively in the interests of all the member states within the EU. In the 1950s, six core states founded the EU's predecessor European Communities ( Belgium , France , Italy , Luxembourg , the Netherlands , and West Germany ). The remaining states have acceded in subsequent enlargements . To accede,

10561-442: The European Commission proposed a new Council Directive to incorporate the main fiscal provisions of the TSCG (all articles of its Title III - except article 7 ) into EU law. The ECB proposed several clarifying amendments to this proposed Council Directive in May 2018, while noting a potential adoption of this Directive should only happen together with an amendment of the pre-existing Council Regulation 1466/97, in order to reflect

10740-411: The European Parliament and Council of Ministers before the 2024 European Parliament election ; and fully applied starting from the presented drafts for 2025 budgets. The first "national medium-term fiscal-structural plans" guided by the new revised fiscal rules, will cover the four-year period 2025-2028, and need to be submitted by each member state by 20 September 2024. The European Parliament

10919-606: The European Pillar of Social Right . In 2020, with the outbreak of the COVID-19 crisis , the European Semester requirements were simplified. During the 2020 round of the European Semester, the main steps basically remained the same, but in response to the high socio-economic uncertainty of the crisis, some measures were made more flexible for the Member States . As opposed to other years, the 2020 European Semester recommendations mainly focused on broad areas that were

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11098-533: The European Stability Mechanism from 2013), but this came with conditions. As a result of the Greek government-debt crisis , Greece accepted a large austerity plan including privatisations and a sell off of state assets in exchange for their bailout. To ensure that Greece complied with the conditions set by the European troika (ECB, IMF, Commission), a 'large-scale technical assistance' from

11277-565: The Lisbon Strategy in the early 2000. Since the Eurozone crisis , the economic dimension of the Economic and Monetary Union (EMU) was enhanced and one additional pillar was added while the existing pillars were strengthened. The 3 Pillars that form the European Semester since the crisis include: The European Semester is a framework of processes that combines hard and soft law. Soft law refers to non-binding processes. Indeed, during

11456-480: The National Council of Slovenia . All elections in member states use some form of proportional representation . The most common type of proportional representation is the party-list system . There are also differences in the level of self-governance for the sub-regions of a member state. Most states, especially the smaller ones, are unitary states ; meaning all major political power is concentrated at

11635-742: The Stability and Growth Pact (SGP), the European Employment Strategy , the Lisbon Strategy that sets the basis of the Open Method of Coordination and the Horizon 2020 strategy. The European Semester was created under the legal basis of the Six-pack and especially Regulation (EU) No 1175/2011 of the European Parliament and of the Council of 16 November 2011 amending Council Regulation (EC) No 1466/97 on

11814-426: The Stability and Growth Pact ). The Medium-term objective (MTO) is the deficit taken in a broader period of time and that is not subjected to economic cycles effects and budgetary short-term measures. The MTO is an important parameter taken into account by the Commission during its assessment of the budgetary situation of a Member State. The MTO must lead to an equilibrium of the deficits of each Member State and

11993-416: The Stability and Growth Pact ). Furthermore, Regulation n°472/2013 in its article 6 states that if a Member State requests financial assistance, an evaluation shall be made on the sustainability of its government debt. In case of an excessive deficit, a deviation from the MTO or from the adjustment path, the Commission can activate the corrective phase of the SGP and recommend during the European semester

12172-482: The Treaty on the Functioning of the European Union , it consists of fiscal monitoring of member states by the European Commission and the Council of the European Union , and the issuing of a yearly Country-Specific Recommendation for fiscal policy actions to ensure a full compliance with the SGP also in the medium-term. If a member state breaches the SGP's outlined maximum limit for government deficit and debt,

12351-539: The euro . For a state to join the European Union, the prior approval of all current member states is required. In addition to enlargement by adding new countries, the EU can also expand by having territories of member states, which are outside the EU, integrate more closely (for example in respect to the dissolution of the Netherlands Antilles ) or by a territory of a member state which had previously seceded and then rejoined (see withdrawal below). There

12530-491: The state's constitution , which it does in Germany. The exact areas where the member states have given legislative competence to the Union are as follows. Every area not mentioned remains with member states. In EU terminology, the term 'competence' means 'authority or responsibility to act'. The table below shows which aspects of governance are exclusively for collective action (through the commission) and which are shared to

12709-416: The twopack reform entered into force in 2013. If just one of the two criteria is not complied with when conducting the first numerical check, and the following investigative article 126(3) report of the Commission concludes this "apparent breach" was non-exempted, then there will be the opening of an Excessive Deficit Procedure (EDP) against the concerned member state - declared by the Council's adoption of

12888-477: The "adjustment path", and they shall annually report an updated target year for when they expect to reach their MTO. It is the responsibility of each Member State through a note in their annual Convergence/Stability report, to select their contemporary MTO at a point being equal to or above the "minimum MTO" calculated every third year by the European Commission (most recently in October 2012 ). The "minimum MTO" that

13067-408: The 126(3) report (i.e. finding the debt breach was solely caused by "structural improving pension reforms" or "payment of bailout funds to financial stability mechanisms" or "payment of national funds to the new European Fund for Strategic Investments " or "appearance of an EU-wide recession" ), then the Commission will recommend the Council to open a debt-breached EDP against the member state by

13246-400: The 2020 Annual Sustainable Growth Strategy, there was a tremendous shift of priorities which stressed the transition towards a sustainable and inclusive economy, technological progress, sustainable solutions and demographic changes. Indeed, the 2020 Strategy has four dimensions; environmental sustainability, productivity gains, fairness and macroeconomic stability. It is a report addressed from

13425-647: The AGS priorities focused on fiscal consolidation, tackling unemployment and the social consequences of the crisis as well as modernizing public administration. From 2015-2018, the focus shifted to boosting investment, pursuing structural reforms, and responsible fiscal policies. Furthermore, in 2019, the priorities stressed that policy efforts at national level should focus on delivering high-quality investment and reforms which increase productivity growth, inclusiveness and institutional capacity, while continuing to ensure macro-financial stability and sound public finances. Finally, in

13604-539: The CSRs is done by Country Teams which are led by the Secretariat-General of the European Commission with contributions from desk officers and several responsible from relevant Directorate-Generals of the European Commission . It has to follow a deliberative and evidence-based process. At the national level, the European Commission engages European Semester Officers (ESOs) who are economic policy experts with

13783-516: The Council the imposition of sanctions, the conditions of which are detailed in Article 4 of Regulation n°1174/2011 . In 2018, 12 countries were subjected to an in-depth review from the Commission because they faced macroeconomic imbalances: Bulgaria, Croatia, Cyprus, France, Germany, Ireland, Italy, the Netherlands, Portugal, Slovenia, Spain and Sweden. Socio-economic coordination relates to

13962-654: The Country Specific Recommendations and the National Reforms Programmes, facilitating the elaboration of plans in order to assess the reform trajectories. In addition, the European Semester timeline will be used to facilitate the exchange of information among the different actors along the process. Although the use of the European Semester as the tool for the Covid-crisis Recovery plan faces criticism, it

14141-547: The EU (sometimes referred to as supranational ) make it unique among international organisations, as it has established its own legal order which by the provisions of the founding treaties is both legally binding and supreme on all the member states (after a landmark ruling of the ECJ in 1964 ). A founding principle of the union is subsidiarity , meaning that decisions are taken collectively if and only if they cannot realistically be taken individually. Each member country appoints to

14320-417: The EU labour market . According to the Copenhagen criteria , membership of the European Union is open to any European country that is a stable, free-market liberal democracy that respects the rule of law and human rights. Furthermore, it has to be willing to accept all the obligations of membership, such as adopting all previously agreed law (the 170,000 pages of acquis communautaire ) and switching to

14499-420: The EU" . Any non-exempted breach of either the deficit or debt criteria of the Stability and Growth Pact declared by a 126(3) report, will however result in the publication of a 126(6) report and 126(7) report shortly afterwards, in which the Council will be recommended to open an EDP and set a deadline for when the breaching of the criteria shall have been corrected by the member state. If any EDP recommendation

14678-486: The EU's style of integration as a union of states does not "emphasise sovereignty or the separation of domestic and foreign affairs [and it] has become a highly developed system for mutual interference in each other's domestic affairs, right down to beer and sausages.". However, on defence and foreign policy issues (and, pre- Lisbon Treaty , police and judicial matters) less sovereignty is transferred, with issues being dealt with by unanimity and co-operation. Very early on in

14857-579: The EU, but have certain exemptions based on their remoteness; see Overseas Countries and Territories Association . These "outermost regions" have partial application of EU law and in some cases are outside of Schengen or the EU VAT area—however they are legally within the EU. They all use the euro as their currency. Abbreviations have been used as a shorthand way of grouping countries by their date of accession. Additionally, other abbreviations have been used to refer to countries which had limited access to

15036-475: The EU; contributing to ensuring sound public finances; fostering economic growth; preventing excessive macroeconomic imbalances in the EU; and implementing the Europe 2020 strategy. However, the rate of the implementation of the recommendations adopted during the European Semester has been disappointing and has gradually declined since its initiation in 2011 which has led to an increase in the debate/criticism towards

15215-691: The Economic Policy Committee (EPC), the Employment Committee (EMCO), and the Social Protection Committee (SPC) discusses and debates the draft of the country-specific recommendations, which are in turn discussed and endorsed by the European Council . Finally, in July, the Council formally adopts the country-specific recommendations, and the member states are supposed to take these recommendations into account in their national decision-making and in

15394-449: The European Commission , Directorate-General for Economic and Financial Affairs , Directorate-General for Employment, Social Affairs and Inclusion , Directorate-General for Taxation and Customs Union for discussion and finally to the college of commissioners for approval. In June, the Council of the EU in its different formations such as Employment, Social Policy, Health and Consumer Affairs Council (EPSCO) and advisory bodies such as

15573-567: The European Commission and other member states was deployed to Greek government ministries. Some, including the President of the Euro Group Jean-Claude Juncker , stated that "the sovereignty of Greece will be massively limited." The situation of the bailed out countries (Greece, Portugal and Ireland) has been described as being a ward or protectorate of the EU with some such as the Netherlands calling for

15752-478: The European Parliament; prospective justices must be confirmed by the existing members. Historically, larger member states were granted an extra Commissioner. However, as the body grew, this right has been removed and each state is represented equally. The six largest states are also granted an Advocates General in the Court of Justice. Finally, the Governing Council of the European Central Bank includes

15931-471: The European Semester became “the main institutional vehicle” for the Recovery and Resilience Facility, and they now encompass each other. The Recovery and Resilience Facility requires from the member states, for the use of the financial support, plans and strategies with reforms and public investment projects. The main European Semester’s tools used to integrate the Recovery and Resilience Facility are

16110-510: The European Semester, there is a coordination between the Member States that are not legally engaged and not forced to comply with its outcomes or its targets. Nevertheless, the European Semester also has a hard law component. Within hard law, the processes of budgetary as well as macroeconomic assessments and recommendations mentioned as legally engaging States in regulations or in treaties, must be observed. That means that States can be subjected to sanctions in case of non-compliance. The first and

16289-500: The Fiscal Compact) into their national legislation. In particular, the general government budget has to be in balance or surplus, under the treaty's definition. As a novelty, an automatic correction mechanism has to be established by written law in order to correct potential significant deviations. Establishment is also required of a national independent monitoring institution to provide fiscal surveillance (commonly referred to as

16468-711: The Guidelines for the Employment Policies of each country. Furthermore, the States are monitored by a scoreboard of indicators set up in the European Pillar of Social Rights ( Council decision 2018/1215 of 16 July 2018 ). It's a draft recommendation made by the Commission in view of the Council recommendation. The document prescribes measures that the Eurozone Member States have to implement in order to tackle critical issues for

16647-424: The Stability and Growth Pact. The outlined debt-limit and debt brake criteria established four ways for a member state to comply with the debt rules, either by simply having a gross debt level below 60% of GDP, or if above 60% of GDP it then needs to be found "sufficiently diminishing" by specific calculation formulas, either over a "3‑year forward looking period" or a "3‑year backward looking period" or

16826-469: The States to Community, the Member States have limited their sovereign rights and have thus created a body of law which binds both their nationals and themselves...The transfer by the States from their domestic legal system to the Community legal system of the rights and obligations arising under the Treaty carries with it a permanent limitation of their sovereign rights. The question of whether Union law

17005-412: The TSCG fiscal rules. As the content of the Directive does not cover all articles of the TSCG, it will however not replace it, but continue to coexist with TSCG. The proposed Council Directive was never adopted, but the latest 2024 reform is a new attempt to integrate the TSCG into EU law, that will likely succeed. Several secondary legislative acts were implemented to strengthen both the preventive and

17184-468: The TSCG had introduced a stricter upper limit for the structural deficit (MTO) at 0.5% of GDP for member states indebted by a debt-to-GDP ratio above 60%, which was a stricter limit than the maximum 1% of GDP being allowed by Council Regulation 1466/97 for all eurozone member states regardless of their debt-to-GDP ratio. If the Council Directive is adopted, it will align the EU fiscal rules with

17363-488: The Treaty on European Union While the member states are sovereign, the union partially follows a supranational system for those functions agreed by treaty to be shared. ("Competences not conferred upon the Union in the Treaties remain with the member states"). Previously limited to European Community matters, the practice, known as the ' community method ', is currently used in many areas of policy. Combined sovereignty

17542-404: The UK eventually withdrew from the EU on 31 January 2020. Prior to 2016, no member state had voted to withdraw. However, French Algeria , Greenland and Saint-Barthélemy did cease being part of the EU (or its predecessor) in 1962, 1985, and 2012, respectively, due to status changes. The situation of Greenland being outside the EU while still subject to an EU member state had been discussed as

17721-567: The adoption of the Euro . Moreover, the 60% criterion was taken over in the Protocol on the procedure regarding excessive deficits attached to the Lisbon Treaty (article 1). For the multilateral surveillance, each Member State has to give to the Commission and the Council in its stability programme all the information concerning its indebtedness ratio (article 3 of Regulation n°1466/97 of

17900-401: The basis of its economic and financial situation using different indicators. There are two types of indicators: The countries that are facing (or that may face) macroeconomic imbalances are subjected to an in-depth analysis that can lead to the opening of an excessive macroeconomic imbalance procedure. If a Member State has seen an excessive macroeconomic imbalance procedure launched against it,

18079-492: The breach in example was solely caused by "extra expenditures caused by implementation of structural improving pension reforms" or "payment of bailout funds to financial stability mechanisms" or "payment of national funds to the European Fund for Strategic Investments " or "appearance of an EU-wide recession" or "other temporary and extraordinary expences specifically allowed by the currently agreed fiscal policy of

18258-408: The breach requires unanimity (excluding the state concerned), but sanctions require only a qualified majority. The state in question would still be bound by the obligations treaties and the Council acting by majority may alter or lift such sanctions. The Treaty of Nice included a preventive mechanism whereby the council, acting by majority, may identify a potential breach and make recommendations to

18437-416: The compliance with the new debt brake rule by the end of the transition period. The Twopack consists of two Regulations that entered into force on 30 May 2013. They are exclusively applicable to eurozone member states and introduced additional coordination and surveillance of their budgetary processes. They were deemed necessary given the higher potential for spillover effects of budgetary policies in

18616-542: The conferral upon the Union of penetrating surveillance competences. The new framework consists of a patchwork of normative acts, both within and outside the formal EU edifice. Consequently, the system is now much more complex. The Treaty on Stability, Coordination and Governance (TSCG), commonly labeled as European Fiscal Compact , was signed on 2 March 2012 by all eurozone member states and eight other EU member states and entered into force on 1 January 2013. As of today, all current 27 EU member states ratified or acceded to

18795-605: The content. After the reform of the SGP in 2005, these programmes have also included the Medium-Term budgetary Objectives (MTO), being individually calculated for each Member State as the medium-term sustainable average-limit for the country's structural deficit , and the Member State is also obliged to outline the measures it intends to implement to attain its MTO. If the EU Member State does not comply with both

18974-412: The coordination of national and European socio-economic policies with the objective of promoting growth and jobs. The 2011 European Semester was dominated by the pursuit of fiscal consolidation and macroeconomic austerity with limited concern for social cohesion and inclusion goals. However, as the sovereign debt crisis within the Eurozone morphed into a broader economic and employment crisis, leading to

19153-467: The corrective arms of the SGP. One must distinguish between the 2011 Sixpack and the 2013 Twopack. The Sixpack consists of five Regulations and one Directive, which all entered into force on 13 December 2011, although compliance with the Directive was only required by 31 December 2013. The corrective arm of the SGP (Regulation 1467/97) was amended by Regulation 1177/2011. By an entirely rewritten "article 2", this amendment introduced and operationalised

19332-453: The country-specific "Minimal Benchmark" criteria. The last round under this assessment scheme took place in Spring 2005, while all subsequent assessments were conducted according to a new reformed scheme – introducing the concept of a single country-specific MTO as the overall steering anchor for the fiscal policy. In order to ensure long-term compliance with the SGP deficit and debt criteria,

19511-490: The country-specific MTO-limit. On this point the TSCG is only stricter than SGP by using the phrase "rapid progress" (without quantifying this term), while the SGP regulation opted instead to use the phrase "sufficient progress". In line with the existing SGP rules, the European Commission will for each country set the available time-frame for the "adjustment path" until the MTO-limit shall be achieved, based on consideration of

19690-564: The crisis, some Members lost access to financial markets to refinance their debt. Clearly, the SGP framework proved not enough to ensure the stability of the Eurozone. For this reason, a bailout facility was deemed necessary to face such extraordinary challenges. The first attempt was the European Financial Stability Facility (EFSF), specifically created in 2010 to help Greece, Portugal, and Ireland. However,

19869-473: The debt limit or debt reduction rule in 2023-2024: "that compliance with the debt reduction benchmark could imply a too demanding frontloaded fiscal effort that would risk to jeopardise economic growth. Therefore, in the view of the Commission, compliance with the debt reduction benchmark is not warranted under the prevailing economic conditions." 10 out of 27 member states (Belgium, Czechia, France, Hungary, Italy, Malta, Poland, Romania, Slovakia and Spain) had

20048-457: The debt limit or debt reduction rule in 2023–2024, stating "that compliance with the debt reduction benchmark could imply a too demanding frontloaded fiscal effort that would risk to jeopardise economic growth. Therefore, in the view of the Commission, compliance with the debt reduction benchmark is not warranted under the prevailing economic conditions." In February 2024, the EU approved a revised set of SGP rules , that will introduce acceptance of

20227-420: The debt reduction requirement of the new debt brake rule three years after its EDP is abrogated. This special transitional "satisfactory pace" is calculated by the Commission individually for each of the concerned member states, and is published to them in form of a figure for: The annually required Minimum Linear Structural Adjustment (MLSA) of the deficit in each of the 3 years in the transition period – ensuring

20406-465: The deficit criteria. The final assessment for compliance with the SGP criteria of each country, will be published by the European Commission on 19 June 2024, in the form of an article 126(3) assessment report investigating if the "apparent breach" was "real" (indicated by a red color) or can be "exempted" (indicated by a yellow color). An article 126(3) assessment report can declare an apparent numerical breach "exempted" and hereby "accepted", if

20585-402: The deficit limit and the debt limit , a so-called "Excessive Deficit Procedure" (EDP) is initiated along with a deadline to comply, which basically includes and outlines an "adjustment path towards reaching the MTO". This procedure is outlined by the "dissuasive arm" regulation. The SGP was initially proposed by German finance minister Theo Waigel in the mid-1990s. Germany had long maintained

20764-403: The democratic secession of a European Union member state. Each state has representation in the institutions of the European Union . Full membership gives the government of a member state a seat in the Council of the European Union and European Council . When decisions are not being taken by consensus , qualified majority voting (which requires majorities both of the number of states and of

20943-527: The directly elected lower house and require its support to stay in office—the exception being Cyprus with its presidential system. Upper houses are composed differently in different member states: it can be directly elected like the Polish senate ; indirectly elected, for example, by regional legislatures like the Federal Council of Austria ; or unelected, but representing certain interest groups like

21122-420: The document the orientation and the objectives of its budgetary policies for 3 years. The document should demonstrate how the country is in the path in reaching its Medium-Term Objective (MTO) and how it will prevent and correct its macroeconomic/budgetary imbalances. The stability programmes must contain macroeconomic forecasts that are provided by an independent authority and that will be reviewed and subjected to

21301-509: The duration of the slow growth period and the possibility that the deficit is related to productivity-enhancing procedures. The pact is part of a set of Council Regulations, decided upon the European Council Summit 22–23 March 2005. The 2010 European sovereign debt crisis proved the serious shortcomings embedded in the SGP. On one hand, fiscal wisdom was not spontaneously followed by the majority of Eurozone Members during

21480-518: The early-2000s expansion cycle. On the other hand, the EDP was not duly carried out, when necessary, as the cases of France and Germany clearly show. In order to stabilise the Eurozone, Member States adopted an extensive package of reforms, aiming at straightening both the substantive budgetary rules and the enforcement framework. The result was a complete revision of the SGP. The measures adopted soon proved highly controversial, because they implied an unprecedented curtailment of national sovereignty and

21659-416: The economic situation of the countries of the EU . It endorses the AGS and lists the broad economic priorities that need to be adopted by the member states. These guidelines allow Member States to develop their stability programs (for euro area members) or convergence programs (for non-euro area members states) and their national reform programmes. Each member state sends two documents to the Commission and

21838-572: The effectiveness of the European Semester. The European Semester was initiated in 2010 with the aim of providing better coordination between the European Union member states regarding their fiscal and economic policies. It is embedded in the architecture of the Economic and Monetary Union of the European Union and was created after the Financial crisis of 2007–08 and the Eurozone crisis . These international economic crisis deeply affected

22017-549: The euro area on the basis of the Commission 's recommendation. The Council also adopts conclusions on the Alert Mechanism Report and on the Annual Growth Survey. During these 2 months, the national parliament of each Member State adopts its budget. At the end of the month, the Commission publishes its Country reports. The reports underline for each State the economic situation and forecasts,

22196-626: The existing economic governance framework of the European Union. In February 2024, the trilogue negotiations between the co-legislators ended with a provisional political agreement on the Commissions proposal for a comprehensive reform of the SGP rules. The reform will introduce acceptance of a slower adjustment path towards respecting the deficit and debt limit of the SGP, and extend the maximum duration of an Excessive Deficit Procedure from four to seven years if certain reform requirements are respected. The new revised rules will be finally adopted by

22375-418: The first provision and procedure of a member state to leave the bloc. The procedure for a state to leave is outlined in TEU Article 50 which also makes clear that "Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements". Although it calls for a negotiated withdrawal between the seceding state and the rest of the EU, if no agreement is reached two years after

22554-403: The fiscal and economic provisions of the treaty (Title III+IV) has been declared by Denmark, Bulgaria and Romania, while this main part of the treaty currently does not apply for Sweden, Poland, Hungary and Czech Republic - until the point of time they either declare otherways or adopt the euro. Member states bound by Title III of the TSCG have to transpose these fiscal provisions (referred to as

22733-542: The fiscal rules. As per legal assessment of ECB, the Commissions reform proposals also aim to integrate the Title III articles of the European Fiscal Compact (TSCG) , and wherever provisions would be different this does not necessitate the subsequent amendment or repeal of the TSCG, because Article 2 of the TSCG ensures that the TSCG provisions will always apply and be interpreted in accordance with

22912-449: The following: Article 126 of the Treaty on the functioning of the European Union prohibits excessive deficits. Besides, the protocol n°12 states 3% of the GDP as maximum . The multilateral surveillance is a part since 2011 of the European Semester. Therefore, each Member State has to give to the Commission and the Council in its stability programme all the information concerning its deficit ratio (article 3 of Regulation n°1466/97 of

23091-417: The formal EDP abrogation then taking place in 2016. During the years where the 23 member states are exempted from complying with the new debt brake rule, they are still obliged to comply with the old debt brake rule that requires the debt-to-GDP ratios in excess of 60% to be "sufficiently diminished", meaning that it must approach the 60% reference value at a "satisfactory pace" ensuring it will succeed to meet

23270-555: The founding treaties from participating in certain policy areas. The admission of a new state the Union is limited to liberal democracies and Freedom House ranks all EU states as being totally free electoral democracies. All but 4 are ranked at the top 1.0 rating. However, the exact political system of a state is not limited, with each state having its own system based on its historical evolution. More than half of member states—16 out of 27—are parliamentary republics , while six states are constitutional monarchies , meaning they have

23449-473: The functioning of the Single currency area. The opinion assesses the conformity of the draft budgetary plan of each Member state in line with the fiscal and budgetary rules (first pillar). It also gives an overview of the implementation of each State regarding the Country-specific recommendation (CSRs) addressed during the former European semester. The Council adopts the recommendations on the economic policy of

23628-408: The government accounts throughout the long-term (calculated on basis of both future potential GDP growth , future cost of government debt, and future increases in age-related costs). The structural balance is calculated by the European Commission as the cyclically adjusted balance minus "one-off measures" (i.e. one-off payments due to reforming a pension scheme ). The cyclically adjusted balance

23807-428: The governors of the national central banks (who may or may not be government appointed) of each euro area country. The larger states traditionally carry more weight in negotiations, however smaller states can be effective impartial mediators and citizens of smaller states are often appointed to sensitive top posts to avoid competition between the larger states. This, together with the disproportionate representation of

23986-399: The growing complexity of the enforcement procedures. The reform process had to reconcile a strong tightening of the EDP with the pressure for wider escape clauses. The tension between these opposite trends fostered the developments of complicated assessment criteria, often translated in sophisticated mathematical formulas. This not only induces confusion in the overall framework, but also makes

24165-415: The history of the EU, the unique state of its establishment and pooling of sovereignty was emphasised by the Court of Justice: By creating a Community of unlimited duration, having its own institutions, its own personality, its own legal capacity and capacity of representation on the international plane and, more particularly, real powers stemming from a limitation of sovereignty or a transfer of powers from

24344-477: The key challenge that the economy is facing which can lead to macroeconomic, financial and budgetary imbalances as well as defining long-term economic and social objectives for Europe. The annual growth survey is based on the progress towards the Europe 2020 targets, the macroeconomic report analyzing the EU economic situation and the joint employment report. The AGS priorities have evolved overtime: From 2011 to 2014,

24523-538: The larger ones). The members of the European Parliament have been elected by universal suffrage since 1979 (before that, they were seconded from national parliaments ). The national governments appoint one member each to the European Commission , the European Court of Justice and the European Court of Auditors . Prospective Commissioners must be confirmed both by the President of the Commission and by

24702-492: The latest data, as soon as the 2024 stability/convergence programme has been published for each country. The colors used to indicate compliance with the SGP criteria, are only preliminary selected based on whether the reported fiscal data exceeds the criteria limits after taking the Commission's latest fiscal policy statements into consideration exempting all debt-related breaches, but without taking any additional factors or subcriteria into consideration when assessing compliance with

24881-423: The legal right to revoke it. States such as France have a number of overseas territories , retained from their former empires . Stability and Growth Pact The Stability and Growth Pact ( SGP ) is an agreement, among all the 27 member states of the European Union (EU), to facilitate and maintain the stability of the Economic and Monetary Union (EMU). Based primarily on Articles 121 and 126 of

25060-508: The macroeconomic, fiscal and budgetary reforms that need to be taken or the way of addressing challenges. These recommendations need to be followed and implemented by the Member States. The CSRs are drafted after a thorough assessment of the progress made from the previous year's CSRs, and a detailed analysis of the National Reform Programmes and Stability or Convergence Programmes. The initial preparation and drafting of

25239-469: The medium term (unique to each Member State based on projections) have to follow a trajectory of adjustment defined by the Commission and the Council . The maximum of 60% of indebtedness relative to the GDP of each Member State was first inserted in the Protocol on the excessive deficit procedure of the Maastricht Treaty (article 1) in order to prepare the convergence of the States towards

25418-490: The member states adopting the euro, to ensure that they did not only meet the Maastricht convergence criteria at the time of adopting the euro but kept on complying with the fiscal criteria for the following years. The Excessive Deficit Procedure (EDP), also known as the corrective arm of the SGP, was suspended via activation of the "general escape clause" during 2020–2023 to allow for higher deficit spending ; first due to

25597-537: The member states have since the SGP-reform in March 2005 striven towards achieving their country-specific Medium-Term budgetary Objective (MTO). The MTO is the set limit, that the structural balance relative to GDP needs to equal or be above for each year in the medium-term. Each state selects its own MTO, but it needs to equal or be better than a calculated minimum requirement (Minimum MTO) ensuring sustainability of

25776-557: The most important period of the semester if we take into account the five documents that are produced: the Annual Growth Survey; the Alert Mechanism Report; the Joint Employment Report; the Commission’s recommendation for the euro area; and the Commission’s opinions on draft budgetary plans. The European semester begins with the submission from the Eurozone Member States of their draft budgetary plans. This also marks

25955-414: The most recent trends in terms of economic and social policies and establishes the general economic and social priorities for the EU. It also provides the Member States with policy guidance for the upcoming year. The Commission gives in the document an overview of the state of the European economy and looks at what has been accomplished in the past years in terms of growth, jobs and investment. It also gives

26134-521: The most related to the sanitary crisis, such as investments on healthcare, preservation of employment, research and development and the preservation of the single market. Created in a context of crises, the European Semester will be adapted in 2021 in response to the COVID-19 crisis. The Recovery and Resilience Facility, as part of the NextGenerationEU (that aims at helping the EU recover from

26313-409: The national level. 9 states allocate power to more local levels of government. Austria, Belgium and Germany are full federations, meaning their regions have constitutional autonomies. Denmark, Finland, France and the Netherlands are federacies , meaning some regions have autonomy but most do not. Spain and Italy have systems of devolution where regions have autonomy, but the national government retains

26492-504: The next year’s national budget. All CSRs adopted in the context of the European Semester since 2011 are registered in the CSR database, which is the main tool for recording and monitoring each member state's annual progress with the implementation of CSRs. In response to the Covid-19 crisis , the EU adapted its socio-economic governance and decided to provide financial support to all member states in order to help them recover. In that context, as

26671-519: The opening of an excessive deficit procedure . The council automatically adopts the recommendation against a Eurozone Member State unless a qualified majority of the States oppose to it (reversed qualified majority) following the procedure stated in the Fiscal compact. For the Non-Euro Members, the council has to agree on the Commission 's recommendation with a qualified majority of

26850-443: The output gap will then be zero, meaning that the "cyclically-adjusted balance" then will be equal to the "government budget balance". In this way, because it is resistant to GDP growth changes, the structural balance is considered to be neutral and comparable across an entire business cycle (including both recession years and "overheated years"), making it perfect to be used consistently as a medium-term budgetary objective. Whenever

27029-475: The overall situation of the employment, the social priorities and the economic stability inside the European Union. It also delivers overall recommendations for the Eurozone and a specific opinion on the draft budgetary plans of the Eurozone countries. The AGS is a communication from the Commission to the other European institutions . It is a comprehensive document of the Autumn Package which analyses

27208-564: The pact was to ensure that fiscal discipline would be maintained and enforced in the EMU. All EU member states are automatically members of both the EMU and the SGP, as this is defined by paragraphs in the EU Treaty itself. The fiscal discipline is ensured by the SGP by requiring each Member State, to implement a fiscal policy aiming for the country to stay within the limits on government deficit (3% of GDP) and debt (60% of GDP); and in case of having

27387-405: The population they represent, but a sufficient blocking minority can veto the proposal). The Presidency of the Council of the European Union rotates among each of the member states, allowing each state six months to help direct the agenda of the EU. Similarly, each state is assigned seats in Parliament according to their population (smaller countries receiving more seats per inhabitant than

27566-470: The presented drafts for 2025 budgets. The first "national medium-term fiscal-structural plans" guided by the new revised fiscal rules, will cover the four-year period 2025–2028, and need to be submitted by each member state by 20 September 2024. This is a timeline of how the Stability and Growth Pact evolved over time: In March 2005, the EU Council, under the pressure of France and Germany, relaxed

27745-470: The prevention and correction of macroeconomic imbalances. Several indicators are used in order to determine the countries that need an in-depth review (IDR) because of the macroeconomic risk they face or may face. This report is mandated by article 140 of the Treaty on the functioning of the EU . This document outlines the important social and employment achievements or developments in the EU . It also gives actions that were taken by Member States in line with

27924-414: The privileges and obligations of membership. They have agreed by the treaties to share their own sovereignty through the institutions of the European Union in certain aspects of government. State governments must agree unanimously in the Council for the union to adopt some policies; for others, collective decisions are made by qualified majority voting . These obligations and sharing of sovereignty within

28103-405: The procedural outcome hardly predictable for Member States. Another widespread criticism concerns the high democratic deficit embedded by the SGP. National policymakers are elected democratically backed up at national level, whereas the EU (in its quality of central watchdog) is only in an indirect way. The friction between the two levels is ever more perceived in periods of economic distress, when

28282-455: The programme gives an overview of the strategic investments and the use of the structural funds made by the state. The situation of the country regarding the objectives of the current framework strategy (currently Europe 2020) are also reported. The measures adopted in the National Reform Programmes should be precise and represent immediate and comprehensive budgetary consequences in relation to national objectives and targets. Each country sets in

28461-487: The progress regarding the implementation of the Country-specific recommendations addressed by the Council in the previous years, the reform priorities that the country needs to endorse as well as a summary of the possible in-depth investigation launched under the AMR. Country reports also cover all areas of macroeconomic or social relevance with the aim of monitoring the progress of Member States. Countries can find in their report

28640-515: The publication of a 126(6) report . For transitional reasons, the regulation granted all 23 EU member states with an ongoing EDP in November 2011, a 3‑year exemption period to comply with the rule, which shall start in the year when the member state have its 2011-EDP abrogated. For example, Ireland will only be obliged to comply with the new debt brake rule in 2019, if they, as expected, manage to correct their EDP in fiscal year 2015 – with

28819-426: The quest for budgetary consolidation becomes more compelling. Scholars agree in referring the issue of democratic deficit to the lack of a more federalised institutional framework for the Eurozone economic governance. The argument goes that strongly legitimated Union institutions would avoid the need for penetrating surveillance mechanisms, as they would partially shift economic policymaking at central level. Because of

28998-450: The remaining republics, four operate a semi-presidential system , where competences are shared between the president and prime minister, while one republic operates a presidential system , where the president is head of both state and government. Parliamentary structure in member states varies: there are 15 unicameral national parliaments and 12 bicameral parliaments. The prime minister and government are usually directly accountable to

29177-548: The role of bringing the Semester closer to national stakeholders by overseeing the implementation of the CSRs, feeding the Country Teams with CSR analysis, national insights and sentiments, and sometimes explaining complex details of EU economic governance to the national stakeholders. When the draft has been formulated by the Country Teams, it is then submitted to the Director-Generals of Secretariat-General of

29356-454: The rules; the EC said it was to respond to criticisms of insufficient flexibility and to make the pact more enforceable. The Ecofin agreed on a reform of the SGP. The ceilings of 3% for budget deficit and 60% for public debt were maintained, but the decision to declare a country in excessive deficit can now rely on certain parameters: the behaviour of the cyclically adjusted budget, the level of debt,

29535-439: The sanitary crisis), was integrated into the European Semester framework. The European economic governance is formed by 3 pillars that were taken over under a single overarching framework: the European Semester. Before 2010, the European economic governance consisted of 2 pillars: the budgetary surveillance since the adoption of the Stability and Growth Pact (SGP) in 1997 and the socio-economic coordination initiated by

29714-578: The seceding state notifying of its intention to leave, it would cease to be subject to the treaties anyway (thus ensuring a right to unilateral withdrawal). There is no formal limit to how much time a member state can take between adopting a policy of withdrawal, and actually triggering Article 50. In a referendum in June 2016 , the United Kingdom voted to withdraw from the EU. The UK government triggered Article 50 on 29 March 2017. After an extended period of negotiation and internal political debate

29893-470: The second pillars of the European Semester form the hard law component. The third pillar is the broader one and the more sensitive for the Member States (mainly because of its social component) and deals with soft law. This pillar under the European semester framework aims at ensuring the surveillance and preventing the apparition of budgetary imbalances. In case of imbalances, corrective measures are taken. The legislative acts and treaties under this pillar are

30072-445: The smaller states in terms of votes and seats in parliament, gives the smaller EU states a greater power of influence than is normally attributed to a state of their size. However most negotiations are still dominated by the larger states. This has traditionally been largely through the " Franco-German motor" but Franco-German influence has diminished slightly following the influx of new members in 2004 (see G6 ). – Article 4 of

30251-399: The specific year(s) in concern. If a state is in breach at the time of the treaty's entry into force, the correction will be deemed to be sufficient if it delivers sufficiently large annual improvements to remain on a country specific predefined "adjustment path" towards the limits at a midterm horizon. Similar to the general escape clause of the SGP, a state suffering a significant recession or

30430-414: The start of a dialogue between the Member States and the Commission . Before the budget of each Member State is debated in its national parliament, the Commission needs to assess it according to numerous elements such as the macroeconomic and budgetary situation of the country or the council recommendations made during former semesters. The Commission releases three documents which explain and demonstrate

30609-472: The state to rectify it before action is taken against it as outlined above. However, the treaties do not provide any mechanism to expel a member state outright. Prior to the Lisbon Treaty , there was no provision or procedure within any of the Treaties of the European Union for a member state to withdraw from the European Union or its predecessor organisations. The Lisbon Treaty changed this and included

30788-437: The strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies", known as the "preventive arm", entered into force 1 July 1998. The second regulation "on speeding up and clarifying the implementation of the excessive deficit procedure", sometimes referred to as the "dissuasive arm" but commonly known as the "corrective arm", entered into force 1 January 1999. The purpose of

30967-400: The strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies. The first Semester was initiated in 2011. At the end of 2017, the scope of the European Semester widened with the announcement by the European Parliament , the Council and the European Commission of the implementation of a social dimension within the third pillar, through

31146-440: The surveillance and request for corrective action will intensify through the declaration of an Excessive Deficit Procedure (EDP); and if these corrective actions continue to remain absent after multiple warnings, a member state of the eurozone can ultimately also be issued economic sanctions. The pact was outlined by a European Council resolution in June 1997, and two Council regulations in July 1997. The first regulation "on

31325-533: The treaty, while the main opponent against the TSCG (the United Kingdom) left the EU in January 2020. The TSCG was intended to promote the launch of a new intergovernmental economic cooperation, outside the formal framework of the EU treaties, because most (but not all) member states at the time of its creation were willing to be bound by extra commitments. Despite being an intergovernmental treaty outside

31504-621: The voting. A lot of countries such as Belgium or Italy were subjected to that procedure. Only 2 countries have never seen an excessive deficit procedure launched against them: Estonia and Sweden . All the Member States have to build their budgetary framework according precise rules detailed in Directive 2011/85 of the Six Pack . Those rules are notably related to accounting, statistics, realism in budgetary information, etc. In case of suspicion of data manipulation or wrong information,

31683-458: Was adopted and entered into force on 30 April 2024, and induced the following changes to the SGP: Both eurozone and non-eurozone EU member states are subjected to a regular compliance check with the SGP deficit and debt criterion. Minimum one ordinary check per year was conducted for all member states since 1998, and minimum two ordinary checks per year for all eurozone member states since

31862-614: Was confirmed by the Annual Sustainable Growth Survey, at the beginning of the 2021-2022 cycle. The Commission classified the four main dimensions of the 2022 European Semester, integrating the Recovery and Resilience Facility: Member state of the European Union The European Union (EU) is a political and economic union of 27 member states that are party to the EU's founding treaties , and thereby subject to

32041-407: Was interpreted and operationalized into a calculation formula for the MTO also to respect the so-called "Minimal Benchmark" (later referred to as "MTO Minimum Benchmark"). When assessing the annual Convergence/Stability programmes of the Member States, the Commission Staff Service checked whether the structural balance of the state complied with both the common "close to balance or surplus" criteria and

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