EU European Semester

Abstract

The European Semester is an EU effort to better coordinate member states’ economic policies. Coordination of national fiscal and economic policy has long been considered essential for the tenability of a monetary union lacking the federal features of taxing and spending. The European Semester coordinates national economies by setting collective deadlines for the submission, analysis and discussion of national budgetary plans as well as the various forms of economic coordination that the EU has accumulated through time, from the Macroeconomic Imbalance Procedure (an agreement amongst EU members to prevent risky macroeconomic policy) to Europe 2020 (the EU’s growth strategy).

In policy terms, the European Semester provides more evidence for those who saw the Economic and Monetary Union (EMU) developing through soft coordination, as some of the most notable outputs are Council recommendations addressed to member states. However, more intrusive tools such as the Stability and Growth Pact (the agreement by which all EU member states commit to maintaining the value of the euro through fiscal responsibility) are now framed within the Semester schedule. Importantly, the design of this framework exemplifies a broader shift in EU economic governance from an ex post monitoring of member states’ preferences to an effort to ex ante shape their adoption. This occurs by scheduling EU discussions before national ones, thus aiming to inform and shape the latter, and by imposing synchronised submission of different policy documents, thus forcing member states to be consistent in their commitments across policy areas. This might raise questions as to the limits of EU action, particularly in the light of subsidiarity concerns.

While the Semester is now part of the official jargon of EU and member states’ economic policy, commitment to such processes in the absence of external pressures (e.g. crisis) has been questioned, as recorded by falling implementation rates. Further, while the first years of the Semester were associated with weak economic growth, the picture has recently turned more positive. That said, there seems to be limited effect on macroeconomic imbalances, one of the main stated objectives of the framework.