Cause and Effect in European Politics and Law

Commission: Member States Do not Apply the European Decisions

Ralitsa Kovacheva, January 5, 2012

With this conclusion starts the 2012 Annual Growth Survey (AGS), presented by the European Commission in the end of 2011. The conclusion is based on a review of what has been achieved in 2011, when Member States had to implement the guidelines of the 2011 Annual Growth Survey. But “in spite of the urgency of the situation progress of Member States in implementing the guidances of the 2011 Annual Growth Survey is below expectations”, the Commission said. Decisions made at European level for radical changes in terms of economic governance have not yet become part of national politics. It takes too long the European decisions to become part of national decisions, even when it comes to key areas such as the internal market. The same applies to the European level, where, because of the legislative procedure with co-decision of the Council and Parliament, important decisions have been pending for too long - a similar fate befell even the package of economic governance.

Following these findings it is not surprising that the priorities in the 2012 Annual Growth Survey are too much like those in 2011. This was admitted too by European Commission President Jose Manuel Barroso: "If many of the messages contained in the first AGS, the AGS for 2011 are still valid today, it is because not enough has been done to implement the recommendations made at that time." For 2012 the European Commission makes five main recommendations to member states:

- To continue fiscal consolidation, but in a growth-friendly way (again focusing on pension reform);

- To take measures for the financial sector, so as to restore normal lending to the economy (focusing on SMEs);

- To promote growth and competitiveness (using the opportunities of the Single Market and EU funds);

- To combat unemployment and the social impact of the crisis (again, through reforming labour market and linking wages to productivity);

- To modernise public administration ("In many Member States, there is scope for increasing the efficiency in the delivery of public services as well as the transparency and quality of public administration and the judiciary").

"Financial markets are assessing the sustainability of Member States' government debt on the basis of long-term growth prospects, on their ability to take far reaching decisions on structural reform and their commitment to improve competitiveness," the document states. For the first time it is being accompanied by a common guidance for tax policies, supporting economic growth. The recommendations are mostly focused on optimising tax collection, removal of exemptions and reducing tax burden on labour.

The priorities in the 2012 AGS should be reflected in the National Reform Programmes and the Stability Programmes (for non-euro area countries - Convergence Programmes), which have to be presented by the countries next spring. They will be assessed by the Commission within the European Semester 2012, as the new tools of the package for enhanced EU economic governance will be used for the first time. The so called "Six Pack" includes measures to strengthen the Stability and Growth Pact, with extended budgetary surveillance and effective sanctions, as well as a new procedure for monitoring and correction of macroeconomic imbalances.

In addition to the package, the Commission presented two new proposals, aimed specifically at budgetary surveillance in the euro area and countries experiencing serious financial problems. Read also the detailed analysis of euinside of the new measures proposed, as well as the Green Paper on options for creating "stability bonds".