Communication from the Commission - Joint harmonised EU programme of business and consumer surveys
Date: 2006-07-12
Institutions: European Commission
Subjects: EU programme, approximation of laws, economic indicator, economic survey, short-term economic prospects

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 12.07.2006 
COM(2006) 379 final 

COMMUNICATION FROM THE COMMISSION 

JOINT HARMONISED EU PROGRAMME OF BUSINESS AND CONSUMER 
SURVEYS 

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COMMUNICATION FROM THE COMMISSION 

JOINT HARMONISED EU PROGRAMME OF BUSINESS AND CONSUMER 
SURVEYS 

1. 

INTRODUCTION 

The Ecofin Council report to the European Council on 11 and 12 December 1999 in 
Helsinki  on  “Economic  policy  co-ordination”  (13123/1/99  Rev  1)  called  for  an 
effective monitoring of economic policies in stage three of Economic and Monetary 
Union (EMU). For this purpose, the Council considered the improved understanding 
of economic developments an essential prerequisite. 

According to the Treaty, the Commission has an important role in informing the EU 
authorities,  the  Member  States  and  the  various  economic  agents  on  the  economic 
situation  and  prospects,  both  at  national  and  at  Community  level.  One  of  the 
instruments to obtain timely information on economic developments are business and 
consumer surveys. For this reason, the Commission, through its Directorate General 
for  Economic  and  Financial  Affairs,  co-ordinates  regular  and  harmonised  business 
and  consumer  surveys  in  different  economic  sectors  in  the  EU  Member  States  and 
the candidate countries.  

2. 

THE NEED FOR A JOINT HARMONISED EU PROGRAMME  

traditional  econometric  models 

The regular business and consumer surveys of the joint harmonised EU Programme 
are  qualitative  economic  surveys,  intended  for  short-term  economic  analysis.  The 
surveys  are  mainly  used  for  qualitative  economic  analysis  but  increasingly  also  for 
quantitative  economic  research.  Particularly,  in  recent  years  a  variety  of  economic 
short-term  forecasting  methods  have  been  developed  that  make  use  of  the 
information  provided  in  business  and  consumer  surveys.  Very  often  these  models 
forecasting  macro-economic 
outperform 
developments. More specifically, business and consumer survey data are increasingly 
used  in  predicting  turning  points  in  the  economic  cycle. Besides  the surveys of the 
joint  harmonised  EU  Programme,  various  other  surveys  of  Commission  services 
exist,  such  as  from 
the  Directorates-General  for  Enterprise  and  Industry, 
Employment  and  Communication.  The  approach  of  these  surveys  is  different  from 
those of the joint harmonised EU Programme since they are intended for long-term 
economic  analysis  and  thus  enquire  about  the  various  structural  determinants  of 
growth and employment. 

in 

The attractiveness of the survey data for qualitative and quantitative analysis stems 
from  the  fact  that  the  survey  data  are  normally  available  ahead  of  the  quantitative 
information from other sources, which they are correlated with. The high frequency 
and continuous harmonisation of the surveys are some of their other main qualities. 
For  this  reason,  business  and  consumer  surveys  have  become  an  indispensable 
complement  of  quantitative  statistical  surveys,  from  which  they  differ  in  methods 
and  use.  As  noted  by  the  recent  report  of  an  external  evaluation  of  the  Joint 

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Harmonised EU Programme of Business and Consumer Surveys (BCS)1, the surveys 
can be considered a highly effective instrument to monitor the economic situation in 
the EU, the euro area and the Member States.  

3. 

IMPLEMENTATION OF THE PROGRAMME 

The  harmonised  business  and  consumer  surveys  in  the  European  Union  were 
initialised in 1961 by the Commission. The first survey was the harmonised business 
survey  in  industry  conducted  in  1962.  Since  then,  both  the  scope  and  the  sectors 
covered  by  the  surveys  have  expanded  considerably.  Particularly,  the  sector  for 
private services, which accounts for an increasing share in the overall economy, has 
been  included  in  the  programme.  In  2006,  a  pilot  survey  in  the  financial  services 
sector was launched. The high sensitivity of this sector regarding confidentiality and 
the  sector’s  idiosyncraticies  in  term  of  cyclical  behaviour  have  been  the  motives 
behind the separation of this survey from the general service sector survey.  

Over the past years, the surveys have been extended to cover all (post-enlargement) 
Members States as well as the candidate countries2. The integration of the candidate 
countries  into  the  programme  at  an  early  stage  is  necessary  in  order  to  provide 
reliable and comparable data to follow their economic evolution at present, and for 
the  elaboration  of  correct  EU  aggregates  once  these  countries  become  members  of 
the EU. Due to an early integration of the countries involved, the recent enlargement 
of the EU was reflected in the Programme by a smooth and timely transition to new 
aggregate indicators. 

The  surveys  are  carried  out  at  national  level  by  collaborating  institutions  such  as 
ministries, statistical institutes, central banks, economic research institutes, business 
associations and private companies. These institutions work with harmonised survey 
questionnaires elaborated in co-operation with the Commission services. The surveys 
feature also a number of other common elements in the area of sample design, field 
work and data transmission. 

Conducting the surveys in accordance with a common methodology, in particular a 
harmonised  questionnaire,  leads  to  a  better  comparability  of  the  data  between 
different  Member  States  and  allows  the  construction  of  meaningful  aggregated 
business cycle indicators for the euro area and the EU. Since this positive externality 
of harmonisation occurs mainly at EU and euro area level rather than at the level of 
the national survey-conducting institutions, the Commission decided from the outset 
to support the activity of the collaborating institutions with action grants (COM (61) 
PV 165 final, 15 November 1961). These grants, which are limited to a maximum of 
50% of the costs of the action, also intend to cover the incremental costs that arise 
initially from the inclusion of additional harmonised questions or the addition of new 
sectors  and  branches  in  the  surveys  and/or  the  change  of  certain  questions  from  a 
non-harmonised  type  to  a  harmonised  one.  In  contrast,  where  the  national  survey 
conducting institutions have no clear interest or vocation in conducting a particular 

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The  European  Evaluation  Consortium,  Evaluation  of  Business  and  Consumer  Surveys,  Final  Report, 
22 April 2005 
The BCS are part of the annual work programme of the Directorate General Economic and Financial 
Affairs and are authorised by means of a financing decision adopted by the Commission 

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type of survey, the Commission concludes a service contract with the selected survey 
conducting entity. In such cases the Commission covers the full cost of the survey. 

The  continuous  development  of  the  Joint  Harmonised  BCS  Programme  gave 
significant  impulses  to  the  advance  of  business  and  consumer  surveys  outside  the 
EU.  As  mentioned  in  the  above-cited  evaluation  report,  the  harmonised  scheme  of 
the  European  Union  has  been  increasingly  adopted  as  the  international  standard. 
Business and consumer surveys following the harmonised methodology are not only 
carried  out  in  the  25  EU  Member  States  and  all  candidate  countries  but  also  in  a 
number  of  other  countries,  particularly  in  Central  and  Eastern  Europe  (e.g.  Russia 
and  Albania).  In  this  regard,  the  EU  harmonised  surveys  continue  to  serve  as  a 
benchmark  for  future  co-operation.  In  particular,  future  applicant  countries  will  be 
integrated in the programme as soon as membership negotiations with the European 
Union start. 

The business surveys are addressed to managers in industry, construction, retail trade 
and  services.  The  consumer  surveys  are  addressed  to  private  households.  With  the 
exception  of  the  investment  survey  in  industry  all  surveys  are  carried  out  on  a 
monthly  basis  with  some  questions  added  every  quarter.  The  investment  survey  is 
conducted  twice  a  year.  The  number  of  questions  varies  between  areas  and  lies 
between 6 and 15.  

The  data  is  normally  collected  in  the  first  half  of  the  month  and  transmitted  to  the 
Commission  services  around  one  week  before  the  end  of  the  month.  More  than 
100,000  firms  and  over  30,000  consumers  are  surveyed  each  month  in  the  EU,  the 
samples  varying  in  accordance  with  the  size  of  the  country.  The  industry  survey 
covers  56  sectors  whereas  the  other  surveys  include  5  to  9  different  sectors.  The 
consumers are split into 25 socio-economic categories. 

A  quarterly  survey  addressed  to  economic  experts  around  the  world,  the  World 
Economic  Survey,  is  also  included  in  the  Programme  and  gives  information  about 
economic developments on a global scale. 

In  addition,  “ad  hoc”  surveys  are  conducted  on  issues  of  particular  interest.  As  an 
example, ad hoc surveys concerning the labour market have been carried out with a 
periodicity of around five years. The results of the most recent survey of June 2004, 
which focused on labour market flexibility and the impact of new technologies on the 
performance of the EU labour market, has been published in 2005. 

All  questionnaires  are  constantly  updated  to  meet  the  requirements  of  economic 
analysts.  The  Commission  services  organise  regularly  (once  or  twice  a  year) 
meetings with business survey experts in order to update the questionnaires, discuss 
issues of harmonisation and data presentation, and evaluate the results of the surveys. 
Occasionally, workshops and working groups are organised, which are addressed to a 
wider  set  of  interested  parties  (including,  e.g.,  user  groups)  with  the  purpose  of 
developing certain aspects of the programme or discussing issues of common interest 
between EU and non-EU countries. Such workshops are sometimes organised in co-
operation with other international bodies such as the OECD.  

The  maintenance  and  development  of  the  database  available  at  the  Commission 
services,  in  which  the  data  of  the  BCS  Programme  is  stored,  requires  specialised 

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software  and  the  maintenance  and  development  of  appropriate  tools  to  handle  and 
analyse  statistically  and  econometrically  large  quantities  of  time  series  data.  Such 
tools  include,  for  instance,  procedures  for  assuring  data  consistency,  the  pre-
adjustment and seasonal adjustment of the data or the construction and development 
of  appropriate  composite  indicators.  While  most  of  these  tasks  are  covered  by  the 
staff  of  the  Commission  services,  in  certain  specific  areas  external  expertise  by 
specialised companies is sought after. Such technical assistance is limited to highly 
technical parts of the process at the end of the production chain and provides for a 
more efficient management of the Programme. 

4. 

PUBLICATION 

The  results  of  the  surveys  are  used  as  such  or  summarised  in  composite  indicators 
(economic  sentiment  and  confidence  indicators).  The  purpose  of  these  composite 
indicators is to synthesise the information contained in the survey data and make the 
presentation  of  survey  results  more  easily  accessible.  As  timeliness  is  a  key 
advantage of the survey data, the period between the transmission of the data from 
the national institutes and publication of the results by the Commission services has 
been shortened in successive steps over the past years. The results are now published 
on  the  last  working  day  of  the  month  during  which  the  data  was  collected.  The 
release  of  the  data  is  accompanied  by  a  press  release.  Monthly  updated  survey 
results, containing the data over the whole survey period, can be downloaded from 
the Internet at: 

http://europa.eu.int/comm/economy_finance/indicators/businessandconsumersurveys_en.htm 

More  detailed  results,  e.g.  broken  down  by  sectors,  can  be  obtained  from  the 
Commission  services  on  request.  While  previously  such  data  was  provided  only 
against a fee, in accordance with the new policy these data are now provided free of 
charge.  

5. 

USE OF THE INFORMATION 

The fact that the business and consumer survey results are available rapidly and that 
they contain information about economic agents’ expectations makes them valuable 
for forecasting purposes.  

The  results  of  the  surveys  are  intensively  used  by  the  Commission  services  as  an 
indispensable  tool  for  economic  surveillance.  This  includes  their  use  in  the  semi-
annual macroeconomic forecasts and in the analysis of business cycle developments 
(e.g. determination of turning points). Some of the structural information contained 
(e.g.  opinions  on  employment  perspectives)  are  also  used  by  various  Commission 
services. 

The  surveys  have  become  a  fundamental  source  of  information  for  monitoring  the 
evolution  of  EMU.  For  instance,  the  European  Central  Bank  uses  these  results  as 
significant input for the assessment of the economic situation in the euro area.  

Apart  from  the  main  actors  in  the  field  of  economic  policy  at  European  level,  the 
business  and  consumer  survey  results  are  also  used  by  various  international 

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organisations,  such  as  the  OECD,  and  national  public  and  private  bodies  for  the 
construction of concurrent and leading economic indicators and, more generally, for 
forecasting purposes.  

6. 

EVALUATION 

For  the  economic  sentiment  indicator  and  other  sector  indicators  to  be  useful,  they 
must  possess  a  series  of  properties  such  as  consistency,  timeliness,  comparability, 
etc.  Moreover,  the  quality  of  the  indicators  needs  to  be  continuously  examined  by 
looking  at  their  performance  of  tracking  the  macro-economic  aggregates  they 
represent.  At  the  most  aggregate  level,  the  indicators  should  be  able  to  track 
sufficiently  well  the  development  of  GDP  growth.  A  good  tracking  performance  is 
also  necessary  for  confidence  indicators  at  sector  level  (industry,  services, 
consumption etc.) in relation to their macro-economic reference variables (e.g. GDP, 
industrial  production,  gross  value  added  of  the  private  services  sector,  private 
consumption  expenditure).  The  tracking  record  of  the  indicators  needs  to  be 
continuously evaluated and modifications and improvements are to be made in line 
with  the  outcome  of  these  evaluations.  Various  research  projects  and  studies  are 
being undertaken on a regular basis to develop new sector indicators or improve the 
existing ones in order to better follow the economic evolution. 

While  the  utility  of  the  programme  for  the  work  of  various  EU  bodies  and 
international organisations in the domain of economic policy has been demonstrated 
without  doubt  there  is  also  a  need  to  evaluate  its  usefulness,  efficiency  and 
effectiveness from an outside perspective. For this reason, a specialised consortium 
was engaged to carry out an evaluation of the existing programme as a whole. This 
evaluation addressed, amongst others, the following issues:  

•  Survey quality and survey programme effectiveness 

•  Efficiency and alternative contractual arrangements 

•  Likely consequence of discontinuing EU co-financing 

•  Users’ future needs 

The report (ECFIN/196/2004/385636, 22 April 2005) concludes that, while progress 
needs to be made on a continuous basis, the survey programme has largely met the 
quality requirements of the users in all respects, with the surveys considered to be a 
highly  reliable  and  relevant  instrument  to  monitor  macroeconomic  developments. 
The  grant-based  survey  programme  can  be  considered  as  cost-effective  and  any 
change  in  contractual  arrangements  such  as  a  move  to  service  contracts  or  to  a 
centralised  survey  scenario  would  carry  the  risk  of  a  substantial  loss  of  important 
economic  information.  Likewise,  a  discontinuation  of  co-financing  the  surveys  by 
the European Commission is likely to lead to the loss of harmonised European data. 
Users’ future information needs include, inter alia, a further detailing of the services 
survey, more information on the financial situation of households and firms and more 
detailed data on the labour market.  

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7. 

REPORTING 

The  Commission  will  present  every  three  years,  starting  in  2008,  a  report  on  the 
implementation  of  the  Programme  in  2006-2008,  giving  an  overview  regarding 
methodological  developments  and  the  use  of  the  information  provided  by  the 
programme. 

8. 

CONCLUSION 

The results of the harmonised business and consumer surveys in the EU have become 
an  important  source  of  information  for  all  those  concerned  with  economic  trends: 
public  institutions,  business  management,  researchers  and,  above  all,  economic 
decision-makers  both  at  national  and  EU/euro  area  level.  The  survey  data  has 
become  an  indispensable  tool  for  economic  surveillance  in  the  EU  and  for 
monitoring the economic prospects of the Economic and Monetary Union as well as 
the development of the candidate countries’ economies. The Commission will assure 
that the programme will also fulfil this role in the future by constantly enhancing and 
improving  its  features  thereby  allowing  it  to  continue  to  provide  essential 
information for the purpose of economic decision making in the European Union. 

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Graph: Economic sentiment, sectoral confidence and GDP in the euro area 

Annex I 

long term average = 100
120

y-o-y growth

0.05

0.04

0.03

0.02

0.01

0

-0.01

1999

2000

2001

2002

2003

2004

2005

ESI (lhs)

GDP

1999

2000

2001

2002

2003

2004

2005

Industry (lhs)

GDP

1999

2000

2001

2002

2003

2004

2005

Services (lhs)

GDP

1999

2000

2001

2002

2003

2004

2005

Consumer (lhs)

GDP

1999

2000

2001

2002

2003

2004

2005

Building (lhs)

GDP

y-o-y growth

0.05

0.04

0.03

0.02

0.01

0

-0.01

y-o-y growth

0.05

0.04

0.03

0.02

0.01

0

-0.01

y-o-y growth

0.05

0.04

0.03

0.02

0.01

0

-0.01

y-o-y growth
0.05

0.04

0.03

0.02

0.01

0

-0.01

115

110

105

100

95

90

85

balance
10
5
0
-5
-10
-15
-20
-25

balance
35
30
25
20
15
10
5
0
-5
-10

balance

5

0

-5

-10

-15

-20

-25

balance

0

-5

-10

-15

-20

-25

-30

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