EN Official Journal of the European Union C 54/1

Resolution of the European Committee of the Regions — 2017 European Semester and in view of the 2018 Annual Growth Survey

(2018/C 054/01)

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

THE EUROPEAN COMMITTEE OF THE REGIONS (CoR),

— having regard to the documents of the 2017 European Semester, namely the Annual Growth Survey, the Country Reports, the National Reform Programmes and the Country-specific Recommendations;

— having regard to its Resolution on the European Commission’s Annual Growth Survey 2017 (RESOL-VI/019) adopted on 8 February 2017;

— having regard to the European Parliament’s report on the 2017 Annual Growth Survey (2016/2306(INI));

Relaunching investments

1. stresses that 55 % of all Country-specific Recommendations issued in 2017 address obstacles to investment which the local and regional authorities can help to remove (1); recalls the need to address the mismatch between functions and financial resources of local and regional governments;

2. insists that cohesion policy should remain the EU’s main investment tool. Considers however that its governance and its interactions with the European Semester should be improved to further increase the multiplier effect of cohesion spending and its contribution to sustainable and inclusive growth;

3. while welcoming the introduction in January 2015 of flexibility margins within the Stability and Growth Pact, the CoR calls for further measures to boost public investment, notably in infrastructure and social inclusion, by excluding national, regional or local co-financing in the context of the European Structural and Investment Funds from the accountancy mechanism of the Stability and Growth Pact likewise co-financing to the European Fund for Strategic Investments, setting out an EU-level typology for quality of public investment in the accounts of public expenditure according to its long-term effects, reviewing the methodology for calculating the ‘structural deficit’ in order to take account of the intrinsic characteristics of national economies and of the structural differences of public expenditure and proposing that an indicator relating to the investment rate be included to the macroeconomic scoreboard;

4. notes that LRAs are involved in about 25 % of projects of the European Fund for Strategic Investment (EFSI) financed by the EIB, but that, as shown by a recent study commissioned by the CoR, significant challenges to their involvement remain, due to administrative capacity, intrinsic complexity of, and low awareness about, the EFSI among cities and regions (2); underlines that more awareness-raising, technical support, advice and synergies with other sources of EU funding are necessary to strengthen the involvement of LRAs in EFSI implementation and ensure a better geographical balance of EFSI projects;

5. shares the Commission’s assessment that EFSI is ‘far from reaching its full potential in boosting human capital development. Additional efforts have to be deployed to design instruments adapted to this sector and to ensure that social and financial actors cooperate more closely’ (3);

6. underlines the importance of continued structural reforms at all levels of government and the removal of red-tape accompanying ongoing investments so as to help improve our business environments and our economies’ investment appeal;

7. points out that access to finance is still a major challenge for SMEs, start-ups and scale-ups in Europe; welcomes measures such as the European Venture Capital Fund of Funds; calls on the Commission, in cooperation with local, regional and national authorities, to take further measures to leverage private investment and promote differentiation of funding sources;

Pursuing structural reforms and responsible fiscal policies

8. reiterates its call for stronger coordination of all EU capacity-building measures and simplification of EU Funds; stresses that 53 % of the 2017 CSRs address issues of administrative capacity, in particular at the subnational level;

9. believes that the EU budget should support Member States’ efforts to implement structural reforms and to remove red-tape accompanying ongoing investments and approves therefore the establishment decided in May 2017 of the EUR 142,8 million Structural Reform Support Programme (2017-2020) which will contribute to institutional, administrative and structural reforms aimed at financing actions of European added value to enhance competitiveness, productivity, growth, jobs, cohesion and investment;

10. reiterates its call on the Commission to consider proposing a fiscal capacity for the Eurozone which could help stabilise the Eurozone if and when needed;

11. calls on the Commission to assess the difficulties that regional and local authorities may face when applying the Public Procurement Directives and underlines the need at local and regional, level for instruments, such as knowledge centres, as a means to help enhance administrative capacity at all levels of government in respect of public procurement and state aid by providing technical assistance and guidance;

12. stresses the need for inclusive growth and improvement of the EU’s social dimension through the implementation of a European Pillar of Social Rights (4) by a strong European social agenda, in which competitiveness and social justice complement each other, and which would foresee inter alia an increased role for social indicators in the European Semester and real wage convergence in line with productivity;

13. underlines against the background of the Commission’s reflection paper on ‘Harnessing globalisation’ (5) the need to help achieve a wider pool of beneficiaries of the benefits of globalisation, to develop further the concept of territorial resilience and stop promoting ‘structural reforms not seeing that their territorial impact is uneven due to regional disparities’ and — to build the EU’s effort to harness globalisation around three main axes: a pro-active strategy on improving skills, knowledge, infrastructure, a mitigation strategy including the European Globalisation Adjustment Fund (EGAF) and other policy instruments, and a participative strategy to better involve citizens in the EU policy-making process; also calls for an upgrade of the EGAF by increasing its budget; — integrating it into the MFF; — lowering significantly the criteria for triggering the EGA; — ensuring synergies with the European Structural and Investment Funds;

14. insists that current global pressures require a comprehensive and place-based EU industrial strategy (6), encompassing the strategic coordination between the relevant EU policies and instruments;

On the 2017 European Semester and towards the 2018 Annual Growth Survey

15. stresses that 76 % of all 2017 Country-specific Recommendations are territory-related, because they address challenges concerning some regions or cities more than others, and their implementation relies on subnational levels of government; notes that 62 % of such recommendations are directly addressed to the local and regional authorities, which highlights the role of the local and regional authorities in undertaking structural reforms;

16. stresses that two thirds of the 2017 National Reform Programmes acknowledge the existence of regional disparities, all of them mention the involvement of the local and regional authorities in the implementation of the NRPs and 70 % of them mention their involvement in the preparation of the NRPs, though still mainly through mere consultation;

17. underlines that the involvement of the local and regional authorities at an early stage as partners in co-designing the NRPs, and the systematic adoption of a multilevel governance approach, would significantly increase the rate of implementation of the recommendations, help to address regional disparities and favour increased ownership on the ground and strengthen trust within and between Member States;

18. invites the EU institutions to implement the CoR proposal of a Code of Conduct for the involvement of the local and regional authorities in the European Semester (7) and welcomes the European Parliament’s endorsement of it (8);

19. recommends that the 2018 Annual Growth Survey includes a specific chapter on the state of the regions and addresses the role of the local and regional authorities, and asks that Member States do the same in their National Reform Programmes; welcomes the support for the call to inject a territorial dimension in the Country-specific recommendations; invites the European Commission to meet representatives of the local and regional authorities when visiting countries at the beginning of the Semester. In the context of support for the incorporation of a territorial dimension into the European Semester, highlights the opportunity to include demographic changes among the elements incorporated, thus linking them to the European Semester, as stated in the CoR opinion on the EU response to the demographic challenge;

20. considering the current mismatch between the annual process of issuing Country-specific recommendations and the medium and long-term programming approach required by the ESIFs, reiterates (9) its belief that the inclusion of cohesion policy in national reform programmes must be redesigned in such a way that maintains the territorial dimension and the partnership-based, decentralised approach;

21. notes that many Country-specific recommendations are reiterated for several years because complex reforms take time to be implemented; is pleased to see that the European Commission shares the suggestion, made by the CoR, that progress in the implementation of such recommendations should be measured on a multiannual, rather than annual, basis; notes that the Commission has found that, on this basis, ‘around two thirds of CSRs issued until 2016 have been implemented with at least some progress’ (10) (compared to 43 % for all CSRs issued in 2016); requests the Commission to transparently publish all elements of such assessment;

22. stresses that the European Semester needs a long-term policy framework; acknowledges in this context the Commission’s efforts to link the UN 2030 Agenda for Sustainable Development and the Sustainable Development Goals (SDGs) with the Europe 2020 Strategy and thereby with the European Structural and Investment Funds. However, given the complexity and the multitude of different reference frameworks, underlines the need for policy coherence, mainstreaming and a consistent governance framework and expects the Commission to rapidly come up which relevant proposals in this regard;

23. stresses that Europe’s refugee and migrant crisis, which began in 2015, is still a major problem for many regions and local authorities. It therefore requires a robust and practical response at European level, including in terms of new funds;

24. points, with concern, to the high level of long-term unemployment, particularly among young people, affecting the economies of various EU Member States; calls, therefore, on the Commission and the Member States to expedite all necessary measures to support the labour market;

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

Brussels, 11 October 2017. The President of the European Committee of the Regions Karl-Heinz LAMBERTZ

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

(2) http://cor.europa.eu/en/documentation/studies/Documents/Implementation-EFSI/implementation_EFSI_pdf.pdf

(3) See Communication from the Commission on ‘2017 European Semester: Assessment of progress on structural reforms, prevention and correction of macroeconomic imbalances, and results of in-depth reviews under Regulation (EU) No 1176/2011’ COM/2017/0090.

(4) CoR opinion on ‘The European Pillar of Social Rights and Reflection paper on the social dimension of Europe’, rapporteur: Mauro D’Attis (EPP/IT), adopted by the CoR on 11 October 2017 (SEDEC-VI/027).

(5) CoR opinion on the Commission’s reflection paper on ‘Harnessing globalisation’, rapporteur: Micaela Fanelli (PES/IT), adopted by the CoR on 10 October 2017 (ECON-VI/024).

(6) A CoR own-initiative opinion on ‘a European strategy for industry: the role and perspective of regional and local authorities’ is currently drafted by Heinz Lehmann (EPP/DE).

(7) CoR opinion on ‘improving the governance of the European Semester: a Code of Conduct for the involvement of local and regional authorities’, rapporteur Rob Jonkman (ECR/NL), adopted on 11 May 2017.

(8) See EP Resolution on the 2016 European Semester adopted on 26 October 2016.

(9) CoR opinion on ‘The future of Cohesion Policy beyond 2020 — For a strong and effective European cohesion policy beyond 2020’, rapporteur Michael Schneider (EPP/DE), adopted on 11 May 2017.

(10) EC Communication accompanying the Country-specific Recommendations for 2017, COM(2017) 500 final (https://ec.europa.eu/info/files/2017-european-semester-communication-country-specific-recommendations_en).