# C_2017088EN.01000401.xml

| 21.3.2017 | EN | Official Journal of the European Union | C 88/4 |
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21.3.2017

EN

Official Journal of the European Union

C 88/4

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Resolution of the European Committee of the Regions — 2016 European Semester and in view of the 2017 Annual Growth Survey

(2017/C 088/02)

| Submitted by the PES, EPP, ALDE and EA political groups |
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Submitted by the PES, EPP, ALDE and EA political groups

THE EUROPEAN COMMITTEE OF THE REGIONS (CoR),

| — | having regard to the main documents of the 2016 European Semester, namely the Annual Growth Survey, the Country Reports, the National Reform Programmes and the Country-specific Recommendations; |
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having regard to the main documents of the 2016 European Semester, namely the Annual Growth Survey, the Country Reports, the National Reform Programmes and the Country-specific Recommendations;

| — | having regard to the European Parliament’s draft report on the European Semester for economic policy coordination: implementation of 2016 priorities (2016/2101 (INI)); |
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having regard to the European Parliament’s draft report on the European Semester for economic policy coordination: implementation of 2016 priorities (2016/2101 (INI));

Relaunching investments

Relaunching investments

| 1. | recalls that public and private investment dropped by around 15 % in the EU with respect to 2007, and in some Member States even by 50 %, due to the economic crisis and to fiscal consolidation measures; highlights that several cumulative years of such under-investment (the ‘investment gap’) represent a major constraint to Europe’s competitiveness and cohesion, hence to its ability to ensure sustainable growth and job creation; |
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1.

recalls that public and private investment dropped by around 15 % in the EU with respect to 2007, and in some Member States even by 50 %, due to the economic crisis and to fiscal consolidation measures; highlights that several cumulative years of such under-investment (the ‘investment gap’) represent a major constraint to Europe’s competitiveness and cohesion, hence to its ability to ensure sustainable growth and job creation;

| 2. | stresses that 40 % of the Country-specific Recommendations for 2016 address obstacles to investment which the local and regional authorities can help to remove (1), including: poor quality of the public administration and lack of coordination; mismatch between functions and financial resources of local and regional governments; burdensome regulatory environment for private investment; corruption; lack of skilled labour-force and of appropriate transport infrastructure; announces that these issues will be also addressed in the CoR’s forthcoming Opinion on Bridging the investment gap: How to tackle the challenges; |
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2.

stresses that 40 % of the Country-specific Recommendations for 2016 address obstacles to investment which the local and regional authorities can help to remove (1), including: poor quality of the public administration and lack of coordination; mismatch between functions and financial resources of local and regional governments; burdensome regulatory environment for private investment; corruption; lack of skilled labour-force and of appropriate transport infrastructure; announces that these issues will be also addressed in the CoR’s forthcoming Opinion on Bridging the investment gap: How to tackle the challenges;

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| 3. | recalls the Declaration about ‘Invest and Connect’ (2) adopted on 9 July 2016 in Bratislava at the 7th European Summit of Regions and Cities, which focused on the importance of removing obstacles hindering the vast untapped investment potential of cities, regions and rural areas in Europe, and the role of the local and regional authorities in providing innovative infrastructure and services to boost investment and improve the quality of life of EU citizens; |
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3.

recalls the Declaration about ‘Invest and Connect’ (2) adopted on 9 July 2016 in Bratislava at the 7th European Summit of Regions and Cities, which focused on the importance of removing obstacles hindering the vast untapped investment potential of cities, regions and rural areas in Europe, and the role of the local and regional authorities in providing innovative infrastructure and services to boost investment and improve the quality of life of EU citizens;

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| 4. | is concerned that around 60 % of respondents in a recent CoR survey of EU local and regional authorities (3) perceived a downward or flat trend in both public and private investment in the past 12 months, which, if confirmed, would suggest that the under-investment trend which started with the economic crisis continues; |
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4.

is concerned that around 60 % of respondents in a recent CoR survey of EU local and regional authorities (3) perceived a downward or flat trend in both public and private investment in the past 12 months, which, if confirmed, would suggest that the under-investment trend which started with the economic crisis continues;

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| 5. | underlines that, according to the same CoR survey, funding public investment remains a challenge for around two thirds of the local and regional authorities, in part due to their insufficient capacity to properly design public investments, to use financial instruments, to submit projects to the EIB and to engage in public-private partnerships; |
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5.

underlines that, according to the same CoR survey, funding public investment remains a challenge for around two thirds of the local and regional authorities, in part due to their insufficient capacity to properly design public investments, to use financial instruments, to submit projects to the EIB and to engage in public-private partnerships;

| 6. | welcomes the first positive results of the European Fund for Strategic Investment (EFSI) relating mainly to its ‘SME window’; at the same time calls for improving the additionality of EFSI’s ‘infrastructure and innovation window’ as well as EFSI’s geographical balance, also by encouraging the development of regional investment strategies and the use of investment platforms to ensure all regions, especially the less developed ones, could benefit from it; |
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6.

welcomes the first positive results of the European Fund for Strategic Investment (EFSI) relating mainly to its ‘SME window’; at the same time calls for improving the additionality of EFSI’s ‘infrastructure and innovation window’ as well as EFSI’s geographical balance, also by encouraging the development of regional investment strategies and the use of investment platforms to ensure all regions, especially the less developed ones, could benefit from it;

| 7. | welcomes in principle the proposal for an extension and reinforcement of the EFSI which will be the subject of a separate CoR opinion; expects further improvements in the areas of additionality, geographical and sectorial coverage, as well as transparency, reiterates the request for a proper assessment of the EFSI results, in particular its synergies with ESIF funds and their contribution to territorial cohesion so far, and looks forwards to a close cooperation with the European Parliament in scrutinising EFSI implementation; |
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7.

welcomes in principle the proposal for an extension and reinforcement of the EFSI which will be the subject of a separate CoR opinion; expects further improvements in the areas of additionality, geographical and sectorial coverage, as well as transparency, reiterates the request for a proper assessment of the EFSI results, in particular its synergies with ESIF funds and their contribution to territorial cohesion so far, and looks forwards to a close cooperation with the European Parliament in scrutinising EFSI implementation;

| 8. | underlines that three quarters of respondents to the CoR survey on obstacles to investment were not aware of the opportunity provided by EFSI and its investment platforms, which should be better communicated to them and to other relevant stakeholders; |
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8.

underlines that three quarters of respondents to the CoR survey on obstacles to investment were not aware of the opportunity provided by EFSI and its investment platforms, which should be better communicated to them and to other relevant stakeholders;

| 9. | notes that smaller regions and municipalities, together with regions that suffer from severe and permanent natural or demographic handicaps, such as the northernmost regions with very low population density and island and mountain regions, can often not make use of EFSI due to the high thresholds for the minimum value of the supported investment and expects the threshold to be lowered when EFSI is revised; |
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9.

notes that smaller regions and municipalities, together with regions that suffer from severe and permanent natural or demographic handicaps, such as the northernmost regions with very low population density and island and mountain regions, can often not make use of EFSI due to the high thresholds for the minimum value of the supported investment and expects the threshold to be lowered when EFSI is revised;

| 10. | stresses that the technical capacity of potential project promoters at the local and regional levels should be enhanced with the help of the European Investment Advisory Hub, in particular in relation to the design and establishment of investment platforms; |
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10.

stresses that the technical capacity of potential project promoters at the local and regional levels should be enhanced with the help of the European Investment Advisory Hub, in particular in relation to the design and establishment of investment platforms;

| 11. | stresses that regional investment strategies should build on the awareness that economic and technological change are rapidly transforming our societies and territories; in this context, underlines the need to promote investment in the low-carbon and circular economy and to support the sharing and collaborative economy, thereby lowering the cost of developing innovative activities, boosting the provision of public and private services to citizens and making the public sector more efficient; |
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11.

stresses that regional investment strategies should build on the awareness that economic and technological change are rapidly transforming our societies and territories; in this context, underlines the need to promote investment in the low-carbon and circular economy and to support the sharing and collaborative economy, thereby lowering the cost of developing innovative activities, boosting the provision of public and private services to citizens and making the public sector more efficient;

| 12. | highlights the importance of stimulating local and regional authorities to use smart specialisation strategies and European partnerships for joint strategic development priorities; |
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12.

highlights the importance of stimulating local and regional authorities to use smart specialisation strategies and European partnerships for joint strategic development priorities;

| 13. | stresses that Cohesion Policy remain the EU’s main investment tool, in particular for its less developed countries and regions; and would like to see more complementarity with EFSI; |
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13.

stresses that Cohesion Policy remain the EU’s main investment tool, in particular for its less developed countries and regions; and would like to see more complementarity with EFSI;

| 14. | recalls its opinion on the Mid-term revision of the Multiannual Financial Framework (MFF), which states that a lack of payment appropriations under the MFF 2014-2020 could induce a risk that the Commission will not be able to meet its obligations, thus creating a payment backlog with negative effects on the implementation of the operational programmes under the ESIF; |
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14.

recalls its opinion on the Mid-term revision of the Multiannual Financial Framework (MFF), which states that a lack of payment appropriations under the MFF 2014-2020 could induce a risk that the Commission will not be able to meet its obligations, thus creating a payment backlog with negative effects on the implementation of the operational programmes under the ESIF;

| 15. | considers that as part of the review of funding under the Structural Funds, national governments could be permitted to set aside a certain amount of EU funding for projects in areas subject to landslides and also for intervention in the event of major natural disasters; |
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15.

considers that as part of the review of funding under the Structural Funds, national governments could be permitted to set aside a certain amount of EU funding for projects in areas subject to landslides and also for intervention in the event of major natural disasters;

Pursuing structural reforms and responsible fiscal policies

Pursuing structural reforms and responsible fiscal policies

| 16. | underlines that more than half of the 2016 Country-specific Recommendations, addressed to 26 countries, are territory-related, i.e. linked to challenges that concern some regions or cities more than others, and/or their implementation relies on sub-national levels of government; |
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16.

underlines that more than half of the 2016 Country-specific Recommendations, addressed to 26 countries, are territory-related, i.e. linked to challenges that concern some regions or cities more than others, and/or their implementation relies on sub-national levels of government;

| 17. | it should be borne in mind that in its opinion on ‘The EU response to the demographic challenge’, the CoR emphasised the link that must exist between demographic change and the European Semester, and stressed the fact that the latter must have a territorial dimension. Local and regional authorities should be active participants in measures taken under the European Semester to tackle demographic challenges, and recommendations made to Member States to address these challenges should take local and regional authorities into account; |
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17.

it should be borne in mind that in its opinion on ‘The EU response to the demographic challenge’, the CoR emphasised the link that must exist between demographic change and the European Semester, and stressed the fact that the latter must have a territorial dimension. Local and regional authorities should be active participants in measures taken under the European Semester to tackle demographic challenges, and recommendations made to Member States to address these challenges should take local and regional authorities into account;

| 18. | stresses that the CoR has consistently opposed the macroeconomic conditionality in the implementation of Cohesion Policy, stipulated in Article 23 of CPR, as this would penalise cities and regions as a result of the Member State’s failure to comply with their obligations under the Stability and Growth Pact; in this respect, fears that the suspension of ESIF funding for Spain and Portugal would have negative effects on the implementation of operational programmes, already considerably delayed. It would also be contradictory to cancel sanctions under the excessive budgetary deficit procedure (Regulation 1173/2011 on the effective implementation of budgetary supervision) but to consider sanctions under Article 23 of the CPR. At the same time highlights the need for more sound economic management at national level, which is a pre-requisite for the efficient use of ESIF funds; |
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18.

stresses that the CoR has consistently opposed the macroeconomic conditionality in the implementation of Cohesion Policy, stipulated in Article 23 of CPR, as this would penalise cities and regions as a result of the Member State’s failure to comply with their obligations under the Stability and Growth Pact; in this respect, fears that the suspension of ESIF funding for Spain and Portugal would have negative effects on the implementation of operational programmes, already considerably delayed. It would also be contradictory to cancel sanctions under the excessive budgetary deficit procedure (Regulation 1173/2011 on the effective implementation of budgetary supervision) but to consider sanctions under Article 23 of the CPR. At the same time highlights the need for more sound economic management at national level, which is a pre-requisite for the efficient use of ESIF funds;

| 19. | reiterates its call that investment made by local and regional authorities in the context of the Structural Funds and the Cohesion fund be excluded from the EU countries’ budget deficit and debt calculations; |
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19.

reiterates its call that investment made by local and regional authorities in the context of the Structural Funds and the Cohesion fund be excluded from the EU countries’ budget deficit and debt calculations;

| 20. | stresses that almost 40 % of the 2016 CSRs, involving 20 Member States, addressed issues of administrative capacity, in particular at the sub-national level, related to structural reforms and the removal of obstacles to investment; recognises that administrative capacity is to be freed up mainly by the creation of efficient administrative structures; recalls its proposal in relation to the proposed Structural Reform Support Programme of a single strategic document setting priorities and criteria to coordinate all EU-funded capacity-building measures; |
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20.

stresses that almost 40 % of the 2016 CSRs, involving 20 Member States, addressed issues of administrative capacity, in particular at the sub-national level, related to structural reforms and the removal of obstacles to investment; recognises that administrative capacity is to be freed up mainly by the creation of efficient administrative structures; recalls its proposal in relation to the proposed Structural Reform Support Programme of a single strategic document setting priorities and criteria to coordinate all EU-funded capacity-building measures;

| 21. | stresses that the Commission should consider proposing a fiscal capacity for the Eurozone to implement anti-cyclical policies and accelerate the recovery, and announces that it will adopt in the coming months an opinion on this issue; |
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21.

stresses that the Commission should consider proposing a fiscal capacity for the Eurozone to implement anti-cyclical policies and accelerate the recovery, and announces that it will adopt in the coming months an opinion on this issue;

| 22. | acknowledges the importance of addressing social and labour market challenges; supports the inclusion by the Commission of social indicators in the macroeconomic imbalances procedure (MIP); |
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22.

acknowledges the importance of addressing social and labour market challenges; supports the inclusion by the Commission of social indicators in the macroeconomic imbalances procedure (MIP);

On the European Semester and towards the 2017 Annual Growth Survey

On the European Semester and towards the 2017 Annual Growth Survey

| 23. | notes the low implementation rate of the Country-specific Recommendations and that all levels of government should be involved in a more intense effort to improve it; notes that some challenges require long-lasting efforts, as shown by the fact that about three quarters of the 2016 territory-related recommendations had already been issued in 2015, and two thirds of those issued last year had already been issued in 2014; |
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23.

notes the low implementation rate of the Country-specific Recommendations and that all levels of government should be involved in a more intense effort to improve it; notes that some challenges require long-lasting efforts, as shown by the fact that about three quarters of the 2016 territory-related recommendations had already been issued in 2015, and two thirds of those issued last year had already been issued in 2014;

| 24. | stresses that, as confirmed this year by both the National Reform Programmes and the Country-specific Recommendations, the involvement of the local and regional authorities in the Semester is mostly confined to the implementation phase of policies, when they should become partners also in designing policies; underlines that their involvement at an early stage would increase significantly the rate of implementation of the recommendations, help to address widening regional disparities, favour increased ownership on the ground and strengthen trust within and between Member States; |
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24.

stresses that, as confirmed this year by both the National Reform Programmes and the Country-specific Recommendations, the involvement of the local and regional authorities in the Semester is mostly confined to the implementation phase of policies, when they should become partners also in designing policies; underlines that their involvement at an early stage would increase significantly the rate of implementation of the recommendations, help to address widening regional disparities, favour increased ownership on the ground and strengthen trust within and between Member States;

| 25. | intends to propose a Code of Conduct for the involvement of the local and regional authorities in the European Semester, respectful of national differences and careful to avoid unnecessary administrative burden, thus contributing to the Better Governance approach. This is assuming that the Code reflects the diversity and constitutional arrangements of the Member States; |
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25.

intends to propose a Code of Conduct for the involvement of the local and regional authorities in the European Semester, respectful of national differences and careful to avoid unnecessary administrative burden, thus contributing to the Better Governance approach. This is assuming that the Code reflects the diversity and constitutional arrangements of the Member States;

| 26. | calls the 2017 AGS to focus specifically on demographic challenges; these challenges also point to the need for economic and financial policies designed to ensure successful, balanced integration of migrants within the EU; |
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26.

calls the 2017 AGS to focus specifically on demographic challenges; these challenges also point to the need for economic and financial policies designed to ensure successful, balanced integration of migrants within the EU;

| 27. | stresses that the European Semester needs to refer to a long-term multi-level policy framework, currently the Europe 2020 Strategy; welcomes the European Commission’s announcement of a forthcoming mapping of the EU’s sustainable development policies and highlights the need to align the EU’s future growth strategy with an updated territorial vision; |
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27.

stresses that the European Semester needs to refer to a long-term multi-level policy framework, currently the Europe 2020 Strategy; welcomes the European Commission’s announcement of a forthcoming mapping of the EU’s sustainable development policies and highlights the need to align the EU’s future growth strategy with an updated territorial vision;

| 28. | instructs the President to forward this resolution to the Commission, the European Parliament, the Council, the President of the European Council and the Slovak Presidency of the Council of the EU. |
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28.

instructs the President to forward this resolution to the Commission, the European Parliament, the Council, the President of the European Council and the Slovak Presidency of the Council of the EU.

Brussels, 12 October 2016.

The President of the European Committee of the Regions

Markku MARKKULA

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(1)  CoR, 2016 European Semester, Territorial analysis of the Country-specific Recommendations, Report of the Steering Committee of the Europe 2020 Monitoring Platform.

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(2)  http://www.cor.europa.eu/bratislavasummit/

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(3)  CoR Survey on ‘Obstacles to investment at local and regional level’, July 2016.

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