Paolo Soro

European Semester Spring Package and draft EU budget 2019

Commission takes next steps in the 2018 cycle of economic policy coordination and presents draft EU budget for 2019; New rules for the European Anti-Fraud Office.

The Commission adopted today the European Semester 2018 Spring Package, including the 27 Country-Specific Recommendations which set out the Commission's economic and social policy guidance for Member States for the next 12 to 18 months, as well as the 2018 edition of the Convergence Report. The latter assesses the seven non-euro Member States' readiness to join the euro: Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania and Sweden. The Commission also adopted a recommendation to the Council to abrogate the excessive deficit procedure for France and reports on Belgium and Italy, reviewing their compliance with the debt criterion of the Treaty. The Commission issued warnings to Hungary and Romania on the existence of a significant deviation from the adjustment path toward the medium-term budgetary objective in 2017 and adopted an opinion on the updated draft budgetary plan for Spain.

The Country-Specific Recommendations adopted today by the Commission concern all Member States except Greece, which is currently under a stability support programme. The Commission called on Member States to pursue structural reforms that improve the business environment and conditions for investment, especially through product and service market reforms, supporting innovation, improving small- and medium-sized enterprises' access to finance and fighting corruption.

Member States should also strengthen economic resilience in the context of long-term challenges, such as demographic trends, migration and climate change. Only resilient economies can ensure long-term economic convergence and the reduction of disparities.

This year, the recommendations dedicate special attention to social challenges, guided by the European Pillar of Social Rights proclaimed in November 2017. There is a particular focus on ensuring the provision of adequate skills, the effectiveness and adequacy of social safety nets and improving social dialogue.

Countries are also recommended to carry out reforms that prepare their workforce for the future, including future forms of work and increasing digitisation; reduce income inequalities; and create employment opportunities, for young people in particular.

The Convergence Report for the non-euro Member States is based on the convergence criteria, sometimes referred to as the ‘Maastricht criteria', set out in article 140(1) of the Treaty on the Functioning of the European Union. It concludes that all of the concerned Member States that are legally committed to joining the euro fulfil the criterion on public finances. Bulgaria, the Czech Republic, Croatia, Hungary and Sweden fulfil the long-term interest rate criterion. Bulgaria, Croatia, Poland and Sweden meet the price stability criterion. According to the Report, none of the Member State fulfils the exchange rate criterion, as none of them are a member of the Exchange Rate Mechanism (ERM II). At least two years of participation in the mechanism without severe tensions is required before joining the euro area. In addition to assessing these formal conditions for joining the euro area, the Report finds that legislation is not fully compatible with the rules of the Economic and Monetary Union in any of the Member States, except in Croatia.

The Commission calls now on the Council to adopt the country-specific recommendations, and on Member States to implement them fully and in a timely manner. EU ministers are expected to discuss the country-specific recommendations before EU Heads of State or Government are due to endorse them. It is then up to Member States to implement the recommendations by addressing them through their national economic and budgetary policies in 2018-2019.

The Commission proposed today the 2019 draft EU Budget of €166 billion in commitments, corresponding to a 3% increase over 2018, investing in a stronger and more resilient European economy and promoting solidarity and security on both sides of the EU's borders.

This budget is the sixth one under the current 2014-2020 long-term EU budget and operates within the limitations set therein. It is designed to optimise funding for existing programmes as well as new initiatives and to boost European added value in line with the Juncker Commission's priorities.

The European Parliament and the EU Member States will now jointly discuss this proposal. Earlier this month, the Commission put forward its proposal for a pragmatic and modern long-term budget for the 2021-2027 period.

The creation of a European Public Prosecutor's Office marks the beginning of a new phase in the fight against fraud affecting the EU budget. In this context, the European Commission proposed today to amend Regulation (EU, Euratom) 883/2013 concerning investigations conducted by the European Anti-Fraud Office (OLAF). The amendment seeks to ensure that the European Anti-Fraud Office is equipped to work closely with the European Public Prosecutor's Office to detect and investigate fraud across the EU. The proposed changes will also clarify OLAF's tools for the conduct of administrative investigations with a view to ensuring their effectiveness. This concerns in particular checks and inspections, access to bank account information, as well as the tools to fight VAT fraud. The European Public Prosecutor's Office and the European Anti-Fraud Office will work in close partnership to ensure – through their distinct but complementary mandates – that all available means are used to counter fraud and to protect taxpayers' money.

Source: EU Commission News

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