EN Official Journal of the European Union C 176/1

Resolution of the European Committee of the Regions — The European Commission’s Annual Growth Survey 2018

(2018/C 176/01)

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

THE EUROPEAN COMMITTEE OF THE REGIONS (CoR),

— having regard to the European Commission’s Communication on the Annual Growth Survey 2018 (AGS) (1) and to the start of the 2018 European Semester;

— having regard to its resolution of 11 October 2017 on the 2017 European Semester and in view of the 2018 Annual Growth Survey (AGS);

— having regard to the European Parliament resolution of 26 October 2017 on the economic policies of the euro area (2);

1. considers that despite the relative macroeconomic recovery of the EU’s economy there is still no scope for complacency, since unemployment rates are still too high in many regions of Europe, particularly among young people, and several cumulative years of under-investment weigh heavily on the EU’s competitiveness and cohesion;

2. shares the Commission’s view that the EU’s lack of competitiveness and cohesion and the banking vulnerabilities call for the structural deficiencies of the Economic and Monetary Union (EMU) to be addressed before any further crisis as outlined in the CoR opinion on Deepening Europe’s EMU by 2025 (3);

3. welcomes the importance given in the AGS to the European pillar of social rights;

4. supports the AGS’ strong focus on long-term growth and therefore regrets that it does not align short-term guidance with EU’s long-term goals of sustainable growth and jobs. The Country-specific Recommendations should take better account of the goals of the UN 2030 Agenda for Sustainable Development;

5. regrets that the AGS does not refer to the role of local and regional authorities (LRAs) in respect to investment; recalls that LRAs are responsible for more than half of public investment in the EU; urges Member States to remove existing obstacles which hinder private and public investment at local and regional level; regrets that the 2018 AGS does not continue analysing obstacles to investment following the initial impulse of the 2016 AGS;

6. is convinced that in order to make the European Semester more effective and increase ownership on the ground, a structured involvement of the local and regional authorities as partners in the European Semester in the light of the actual division of powers and competences across levels of government in EU Member States is a condition sine qua non. The CoR reiterates its call for establishing a code of conduct for involving local and regional authorities in the European Semester (4) and invites the Commission to take an active part in promoting such a code; recommends also that the next AGS include 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;

7. recommends that Member States involve local and regional bodies directly in their National Reform Programmes and in the European Semester process, bearing in mind that regions cannot be penalised for missing objectives that are the exclusive responsibility of the State;

8. considers that the CSRs should give a more prominent place to the issues related to demographic change as the latter becomes an increasingly important parameter of territorial and social cohesion;

9. stresses that the ESI Funds are — and should remain — the EU’s main tool to achieve the Treaty objectives of economic, social and territorial cohesion; the required programming in the operational programmes has consolidated itself as an indispensable tool to assess the economic situation of the regions and their needs for a reform;

10. also opposes the concept of subordinating cohesion policy to the ‘European Semester’ exercise since cohesion policy has its own legitimacy, enshrined in the European Treaties. Moreover, if the link was to be made more effective by including cohesion policy in national reform programmes, the latter must, starting from the European level, be redesigned in a way that maintains the territorial dimension and the partnership-based, decentralised approach (5);

11. notes that not only should administrative capacities be strengthened, but a genuine simplification of the rules governing the ESIF should also be carried out, as these have a negative effect on these capacities, and on the efficiency and effectiveness of the human resource structures deployed to manage these funds;

12. welcomes the performance of the EFSI so far in terms of the amount of investment activated; remains concerned however by the EFSI’s uncertain additionality and unbalanced geographic coverage; highlights that, as shown by a recent study promoted by the CoR (6), lack of administrative capacity, lack of funding for long-term investment and burdensome regulations still prevent use of the EFSI by LRAs;

13. takes note of the Commission’s proposal to establish, with the participation of the European Investment Bank (EIB), a specific initiative to improve access for the outermost regions to the European Fund for Strategic Investment (EFSI), including through advice provided by the European Investment Advisory Hub;

14. recalls that the CoR has been supportive of initiatives towards further trade liberalisation but insists that any new initiative must imperatively be preceded by impact assessments early identifying and quantifying possible asymmetric impacts on European regions, to allow swift public policy response. Also calls for the EU’s trade defence instruments to become a rapid and effective tool for addressing unfair trade practices;

15. agrees that the future of Europe’s industry depends on its ability to invest in quality production, new technologies and to tackle the challenges and opportunities of digitalisation and decarbonisation and that particular attention needs to be given to investment in the technological enhancement of SMEs and the specialisation of workers; calls on the Commission to use the communication on industrial policy strategy as a basis for developing a more ambitious and holistic vision for European industry with a medium-term time horizon and a strong territorial dimension taking into account the central role of regional ecosystems in industrial modernisation;

16. emphasises that in order to be compatible with the principle of subsidiarity to provide European added value in terms of competitiveness, structural reforms addressed in the AGS should focus on policy areas which are of EU relevance in terms of competences;

17. stresses the importance of supporting regions and cities in strengthening and interlinking their entrepreneurial ecosystems to help SMEs to better integrate into transregional, European and global value chains; therefore, agrees with the Commission’s objectives of fostering cross-border access and collaboration between SMEs along the value chain; this is particularly important in regions with permanent territorial handicaps that hinder international opportunities for businesses;

18. recalls the importance of a business-friendly administrative and regulatory environment to make it easier for companies, and particularly for scale-ups, to access finance and raise funds cross-border and fully unleash the potential of the European risk-capital market;

19. emphasises that the lack of administrative capacity on the part of many public authorities at local and regional level is an obstacle to the implementation of structural reforms and to the long-term investments needed to bridge the investment gap; reiterates that the Commission should issue a single strategic document coordinating all streams of EU-funded technical assistance for capacity-building, including the Structural Reform Support Programme;

20. reiterates its request that investments by local and regional authorities under the ESI Funds in all EU countries be excluded from the calculation of the deficit and debt ceilings set by the SGP; opposes macroeconomic conditionalities which would amount to punishing regions and cities for political choices they cannot control;

21. supports the need to ensure sound public finances and reduction of the high levels of public debt in the interest of the next generations; stresses that the composition of public expenditure should be improved, in the light of the OECD principles for effective public investment across levels of government; is engaged in contributing to monitor the implementation of such rules; invites the Commission to take action to promote fiscal decentralisation across the EU, which, according to available evidence, would improve the effectiveness of public spending (7);

22. agrees with the need to make effective use of the tools available at EU level, in particular the Cohesion Policy’s Structural and Investment Funds, but feels that the way the performance framework works should be improved and the excessive rigidity from which it suffers should be avoided;

23. stresses that a large share of public procurement is carried out by local and regional authorities and that efforts aimed at improving administrative capacity in the public procurement package (8) should therefore be directed specifically towards local and regional authorities;

24. highlights that, in the recent joint OECD-CoR survey on funding, management and regulatory challenges to infrastructure investment of EU cities and regions (9), 66 % of the respondents claimed that they were challenged by the complexity of EU public procurement directives and 61 % by the potential cost and time involved in judiciary litigation concerning contract award procedures;

25. urges Member States to take measures to reduce debt bias in taxation and fight aggressive tax planning; stresses that the ongoing work towards a Common Consolidated Tax Base (CCCTB), legally binding anti-abuse measures and increased tax transparency are crucial; welcomes the Commission’s efforts to establish rules allowing taxation of profits generated by multinationals through the digital economy;

26. welcomes the call for a stronger focus on the composition and efficiency of defence-related public spending; stresses that such spending should help overcome the current fragmentation of the EU defence industry, also by encouraging rationalisation and cross-border cooperation between companies of all sizes;

27. notes that 76 % of the Country-specific recommendations for 2017 concern structural reforms which may have a differentiated territorial impact and which, on the basis of the current division of powers between levels of government, can only be addressed in partnership with local and regional authorities;

28. welcomes the 2018 AGS statement that stronger and more efficient public institutions are crucial for building resilient economic structures that foster investment and growth, and its acknowledgment that structural reforms should take into account distributional effects on regions;

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

Brussels, 1 February 2018. The President of the European Committee of the Regions Karl-Heinz LAMBERTZ

(1) COM(2017) 690 final.

(2) http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P8-TA-2017-0418&language=EN&ring=A8-2017-0310.

(3) Adopted on 30 November 2017, Rapporteur: Christophe Rouillon (FR/PES).

(4) See CoR Opinion on Improving the governance of the European Semester: a Code of Conduct for the involvement of local and regional authorities of 11 May 2017.

(5) See CoR Opinion on the future of Cohesion Policy beyond 2020 ‘For a strong and effective European cohesion policy beyond 2020’ of 12 May 2017.

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

(7) See also OECD report on Fiscal Federalism 2016 — Making Decentralisation Work.

(8) COM(2017) 572.

(9) Under publication.