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02 June 2014

Country-specific recommendations 2014


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The European Commission has adopted a series of economic policy recommendations to strengthen the recovery that began a year ago. The recommendations are based on detailed analyses of each country's situation and provide guidance on how to boost growth, increase competitiveness and create jobs.


This year, the emphasis has shifted from addressing the urgent problems caused by the crisis to strengthening the conditions for sustainable growth and employment in a post-crisis economy. As part of today's package, which marks the culmination of the fourth European Semester of economic policy coordination, the Commission has also adopted several decisions on Member States' public finances under the Stability and Growth Pact. Taken together, they represent an ambitious set of reforms for the EU economy.

According to the Commission's analysis, sustained policy efforts at all levels in recent years have put the EU economy on much firmer ground. However, growth will remain uneven and fragile over 2014-2015, so the momentum for reform must be maintained. Over the longer term, the EU's growth potential is still relatively low: high unemployment levels and the difficult social situation will only improve slowly and the large investment gap will take time to be filled.

This year, recommendations have been made to 26 countries (excluding Greece and Cyprus, which are implementing economic adjustment programmes). They reflect progress made since the 2013 round of recommendations, which has yielded positive results. However, because the recovery is still unevenly spread and fragile, structural reforms of our economies need to continue, specifically:

To tackle high unemployment, inequality and poverty: The crisis has had a severe and lasting impact on the level of unemployment in the EU, which remained dramatically high at 10.8 per cent in 2013, with differences ranging from 4.9 per cent in Austria to 27.3 per cent in Greece. This requires continued reforms of employment policies, as well as improved coverage and performance of education and welfare systems. Particular attention is paid in the recommendations to tackling youth unemployment, notably by implementing a Youth Guarantee.

To shift to jobs-friendlier taxation: Many countries have relied on tax rises rather than spending cuts during the crisis and the overall tax burden has risen. Because there is limited room for manoeuvre when it comes to public finances, a number of recommendations focus on shifting taxation from labour to more recurrent property, consumption and environmental taxes, to strengthen tax compliance and fight tax fraud.

To boost private investment: Bank funding remains tight in Italy, Greece, Spain, Lithuania, Slovenia, Croatia and Cyprus, especially for small and medium-sized enterprises. The recommendations point to a need to further stabilise the banking sector and support alternative forms of finance – for instance, loan guarantee schemes or corporate bonds.

To make  economies more competitive: Progress on structural reforms of key sectors remains limited compared to 2013. A number of recommendations this year push for further reforms in the services sector, energy and transport infrastructure, R&D systems and competition law.

To bring down debt: Due to the accumulation of deficits over time, public debt is forecast to peak this year and needs to be put on a downward path, particularly in Belgium, Ireland, Greece, Spain, Italy, Cyprus and Portugal, where it remains above 100 per cent of GDP. The challenge for public finances is to manage the costs of ageing – particularly pensions and healthcare - and to preserve growth-enhancing expenditure in education, research and innovation.

The European Commission has also recommended that the EU Council of Ministers close the Excessive Deficit Procedure (EDP) for six countries: Austria, Belgium, Czech Republic, Denmark, the Netherlands and Slovakia.

Full press release

Q&A

Press release on Excessive Deficit Procedure


President José Manuel Barroso said: "This is about helping Member States firmly out of the crisis and back to growth, with the country-specific recommendations acting as a compass showing the direction. The efforts and sacrifices made across Europe have started to pay off. Growth is picking up and - while still too modest - we will see a rise in employment from this year onwards. The fundamental challenge for the EU now is political: How do we keep up support for reform as the pressure of the crisis recedes? If politicians show leadership and summon the political will to see reform through – even if it is unpopular - we can deliver a stronger recovery and a better standard of living for everyone."

Full statement

Olli Rehn, Commissioner responsible for Economic and Monetary Affairs and the Euro, commented: "If you look at Europe in June 2014, Europe is today portrayed both by political discontent and economic recovery. The crisis has certainly left a heavy legacy on our societies and our economies, which is feeding political discontent, but at the same time, in the elections, European oriented, often critical but fundamentally constructive political parties gained a majority in the new European Parliament. The Commission's task is to present credible, realistic and realisable policy initiatives, and that's what today's recommendations are about. They provide policy recommendations to the EU member states and also to the euro area in its entirety on what is needed to boost sustainable growth, to boost investment, create sustainable jobs and ensure sound public finances."

Full statement

Commissioner for Employment, Social Affairs and Inclusion, László Andor, said: "Although there are some signs of economic recovery, it remains slow; it is still very fragile; and it is uneven throughout the EU. Unemployment data confirm continuing stagnation in Europe's labour markets. The situation remains dire: unemployment has increased to close to 26 million; there are 5.3 million jobless young people; and around half of the unemployed have been without a job for more than a year. The European Semester country-specific recommendations are not only about monitoring fiscal policies and competitiveness developments.

Indeed, this year, for the first time under the European Semester, the Commission uses a new employment and social scoreboard to ensure that country-specific recommendations are based on sound analysis and address employment and social concerns more precisely. One of the biggest challenges we face today deals with the growing divergences in the employment and social situations of Member States within the euro area. The core-periphery gaps keep widening. As a result of the economic crisis, some Member States are witnessing declining household disposable income, rising inequalities, poverty and social exclusion."

Full statement

Algirdas Šemeta, Commissioner responsible for Taxation and Customs Union, Statistics, Audit and Anti-fraud, commented: "If we want to create jobs in Europe; if we want to truly become competitive; then we absolutely need to bring down the cost of work, and taxation is pivotal in that process. Over 25 million people are out of work in Europe. Yet, with a tax wedge of 46.5 per cent in the eurozone, our tax burden on labour outweighs other OECD countries. This figure must be reduced, especially for low income earners.

Following previous country specific recommendations, there has been some progress. However, much more remains to be done before we have a level of taxation that supports a job-rich recovery. Therefore, we have recommended that Austria, Belgium, Czech Republic, Germany, France, Hungary, Italy, Latvia, Lithuania, Netherlands, Romania and Spain do more to shift taxation away from labour to less distortive tax bases. This shift should be towards the 3 "P"s: Pollution, Property and Purchases."

Full statement



© European Commission


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