COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Concluding the first European semester of economic policy coordination: Guidance for national policies in 2011-2012
Date: 2011-06-07
Institutions: European Commission
Subjects: Germany, anti-crisis plan, competitiveness, economic disparity, economic recovery, job creation, monetary crisis, regional disparity, stability pact, stability programme

EUROPEAN COMMISSION 

Brussels, 7.6.2011 
COM(2011) 400 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN 
ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE 
REGIONS 

Concluding the first European semester of economic policy coordination:  
Guidance for national policies in 2011-2012 

{SEC(2011) 801 final} 
{SEC(2011) 802 final} 
{SEC(2011) 803 final} 
{SEC(2011) 804 final} 
{SEC(2011) 805 final} 
{SEC(2011) 806 final} 
{SEC(2011) 807 final} 
{SEC(2011) 808 final} 
{SEC(2011) 809 final} 
{SEC(2011) 810 final} 
{SEC(2011) 811 final} 
{SEC(2011) 812 final} 
{SEC(2011) 813 final} 
{SEC(2011) 814 final} 
{SEC(2011) 815 final} 
{SEC(2011) 816 final} 
{SEC(2011) 817 final} 
{SEC(2011) 818 final} 
{SEC(2011) 819 final} 
{SEC(2011) 820 final} 
{SEC(2011) 821 final} 
{SEC(2011) 822 final} 
{SEC(2011) 823 final} 
{SEC(2011) 824 final} 
{SEC(2011) 825 final} 
{SEC(2011) 826 final} 
{SEC(2011) 827 final} 
{SEC(2011) 828 final}

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN 
ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE 
REGIONS 

Concluding the first European semester of economic policy coordination:  
Guidance for national policies in 2011-2012  

1. 

HELPING THE EU TO EMERGE STRONGER FROM THE CRISIS  

The EU is tackling the worst economic crisis since its foundation – governments and citizens 
alike  have  faced  pressures  like  never  before,  unprecedented  decisions  have  been  taken  in  a 
very short timespan and this has been costly and painful. The crisis did not start in Europe and 
other  major  economies  have  suffered  similar  shocks.  Inside  the  EU,  the  impact  has  varied 
from country to country – some Member States rebounded quickly from the initial downturn 
but  others  are  facing  huge  challenges.  The  Commission's  forecasts  show  that  economic 
recovery is gaining ground in the EU, but it remains uneven and subject to uncertainties.  

There  is  no  "back  to  business-as-usual":  our  societies  will  be  radically  affected  and 
transformed  by  the  shocks  experienced  over  the  last  three  years,  our  growth  potential  has 
suffered,  our  public  finances  and  financial  systems  have  been  adversely  affected  and 
unemployment  has  hit  a  significant  part  of  our  population,  notably  our  young  people.  For 
many people, there is a prospect of hardship for some time to come, and for others, a growing 
realisation of what a jobless recovery could entail. In many places, the reaction has been anger 
and frustration.  

The crisis has brought home to us that our economies are interconnected and that our futures 
are intertwined. The EU is a shared economic space, not 27 economies, and what affects one 
country,  affects  all.  This  is  particularly  the  case  for  the  17  Member  States  sharing  a  single 
currency  as  part  of  the  Euro  area.  To  regain  our  capacity  to  grow  and  ensure  that  Member 
States performances reinforce rather than hinder each other, we need to inject the collective 
EU dimension into national policy-making, before decisions are taken. The need for stronger 
policy co-ordination at EU level is not only linked to the crisis – macro-economic imbalances 
had  built  up  over  several  years,  leaving  many  Member  States  with  little  or  no  room  for 
manoeuvre when the crisis hit. Stronger policy co-ordination is also the best response the EU 
can  make  to  the  challenges  of  globalisation.  Outside  the  EU,  the  emerging  economies  were 
less  affected  by  the  crisis  and  they  are  enjoying  very  strong  growth  rates:  the  EU  needs 
constant efforts to boost its competitiveness in world markets to sustain its standards of living. 

A key lesson from this experience was that focusing only on the deficit criteria of the Stability 
and Growth Pact (SGP) and weak implementation did not prevent serious problems in other 
areas. This meant we were too late in picking up on crucial issues. And when we did pick up 
on  them,  our  reticence  to  challenge  each  other  constructively  meant  there  was  no  sense  of 
collective responsibility for the outcome. All too often, market pressures dictated our course 
of action.  

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Faced with the immediacy of the crisis, the EU has been developing a common, coherent and 
comprehensive  response  –  putting  together  recovery  plans,  coordinating  the  rescue  and 
restructuring  of  banks  and  completely  overhauling  the  supervision  of  financial  services, 
providing  macro-financial  assistance  to  several  Member  States1,  creating  new  support 
mechanisms to safeguard financial stability in the Euro area and setting ambitious goals for a 
new path to smart, sustainable and inclusive growth as part of the Europe 2020 strategy2. 

A  new  EU  economic  governance  is  emerging.  The  legislative  proposals  of  the  Commission 
and the work of the Task Force headed by the President of the European Council will lead to a 
complete redesign of the EU tools to prevent macro-economic imbalances and reinforce the 
operation of the Stability and Growth Pact. In Spring this year, Euro area Member States and 
several  other  Member  States3  agreed  to  make  additional  efforts  to  foster  competitiveness, 
employment, sustainability of public finances and financial stability as part of the Euro Plus 
Pact. 

The EU is now implementing a new working method – the European semester – to ensure that 
collective  discussion  on key  priorities  takes  place  at  EU  level,  before  and  not  after  national 
decisions  are  taken.  The  results  of  this  discussion  must  then  be  effectively  reflected  in 
national  decision-making,  in  particular  in  national  budgets  and  structural  reforms,  so  that 
national  and  EU  efforts  are  brought  together  in  the  right  sequence  to  deliver  and  monitor 
progress over time. 

Based on its assessment of the programmes presented by the Member States, the Commission 
is now putting forward country-specific recommendations as well as recommendations for the 
Euro area. This guidance is limited to key priorities to be addressed in the next 12-18 months. 
This reflects a deliberate choice to concentrate on the most pressing challenges and what can 
realistically be achieved in that time frame, taking into account the specific circumstances of 
each Member State. For those Member States that are receiving external financial assistance, 
the  Commission  has  chosen  to  make  only  one  recommendation  –  that  they  implement  their 
programme  commitments  on  schedule.  More  detailed  analysis  is  provided  in  supporting 
documents  to  highlight  aspects  of  a  structural  nature  and  point  to  medium-term  priorities, 
notably  linked  to  delivering  the  Europe  2020  targets.  Once  adopted  by  the  Council,  each 
Member  State  should  reflect  this  guidance  in  its  national  decision-making  and  annual 
budgetary processes. 

1 
2 

3 

Greece, Ireland, Latvia, Portugal and Romania. 
The Strategy includes five headline targets to be met by the EU by 2020: raising its employment rate to 
75%,  raising  its  investment  levels  in  R&D  to  3%  of  GDP,  meeting  its  climate  change  and  energy 
objectives ("20 20 20"), increasing the share of the population at tertiary or equivalent education levels 
to at least 40% and reducing early-school leaving to less than 10%, promoting social inclusion by lifting 
at least 20 million people out of the risk of poverty and exclusion. 
Bulgaria, Denmark, Latvia, Lithuania, Poland and Romania. 

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Box 1. The first European semester 

The  European  semester  started  in  January  2011  with  the  presentation  of  key  EU  socio-economic 
challenges  by  the  Commission  in  its  Annual  Growth  Survey  (AGS)  and  the  Joint  Employment 
Report4. The Spring European Council endorsed and complemented the guidance given by the AGS. 
Against  this  background,  Member  States  were  requested  to  present  Stability  or  Convergence 
Programmes  (SCPs)  –  dealing  with  the  situation  of  their  public  finances  –  and  National  Reform 
Programmes (NRPs) – presenting key policy measures to sustain growth and jobs and reach the goals 
of the Europe 2020 strategy – at the end of April5. In addition, most members of the Euro Plus Pact 
have presented specific commitments made under the Pact (see below).  

The  Commission  has  assessed  these  programmes  and  commitments,  and  is  now  presenting  its 
guidance  on  a  country-by-country  basis  so  that  the  June  European  Council  can  conclude  the  first 
semester. While it is acknowledged that reforms may take time to deliver results, the Commission has 
focused on areas where new steps need to be taken now. 

In the light of this first experience, the Commissions considers that the European semester can become 
an  effective  governance  method  to  support  EU  and  national  policy  making  in  an  integrated, 
transparent  and  timely  manner,  provided  the  Member  States  decide  collectively  on  the  key  policy 
orientations to be implemented and follow up on the Council's recommendations:  

- The simultaneous presentation of the SCPs and NRPs enables the EU to assess national growth and 
fiscal strategies together, including possible risks, imbalances or trade-offs that would not otherwise 
be picked up. This is why the Commission is presenting an integrated set of recommendations for each 
Member State, respecting the different legal bases that underpin them. The Council is invited to send a 
single set of recommendations to each Member State, which includes the Council opinion on its fiscal 
situation. 

-  Bringing  together  EU-level  and  country-specific  guidance  allows  national  agendas  to  be  discussed 
and presented against the background of EU goals. This means that the EU dimension can be inserted 
into national policy-making before decisions are taken. It also allows the EU to take stock of national 
efforts and decide on complementary actions to be taken at EU level, for instance in the context of the 
Europe 2020 flagship initiatives6.  

- The combination of short-term guidance and of medium-term targets gives the EU and its Member 
States the means to develop a sequence of reforms and stronger, better co-ordinated policies over time. 

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"Annual  Growth  Survey  2011:  advancing  the  EU’s  comprehensive  response  to  the  crisis"  -  
COM(2011) 11, 12.1.2011, including the draft Joint Employment Report. 
Portugal  and  Greece  did  not  formally  present  Stability  Programmes.  Their  policy  priorities  will  be 
regularly discussed in the context of the follow-up to the assistance programmes. 
The Commission has put forward a series of EU-level initiatives ("Europe 2020 flagships") to support 
the  achievements  of  the  Europe  2020  objectives:  "Digital  Agenda",  "Innovation  Union",  "A  new 
Industrial  Policy",  "Youth  on  the  Move",  "New  Skills  and  Jobs",  "A  Platform  Against  Poverty", 
"Resource Efficiency". It has also put forward several key actions to tap the potential of the European 
single market in the form of a new "Single Market Act". 

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2. 

COMMISSION ASSESSMENT AND RECOMMENDATIONS 

The  overall  assessment  of  the  Commission  is  that  the  programmes  presented  by  the 
Member  States  constitute  a  good  starting  point  for  sustaining  Europe's  recovery,  for 
addressing fiscal challenges and for driving more ambitious reforms at national level. The 
guidance of the Annual Growth Survey has been broadly taken up in national efforts. The 
adoption of national targets shows there is a significant degree of commitment to the goals 
of the Europe 2020 strategy7. 

However, the Commission is concerned to see that the combination of these commitments 
would not allow the EU to meet its headline targets by 2020. On the basis of the national 
commitments,  the  EU  is  on  track  to  achieve  its  targets  for  emissions  reduction,  for 
renewable energy and for early school-leaving. Additional efforts are required for reaching 
the  targets  in  the  areas  of  employment,  research  and  development,  energy  efficiency, 
tertiary education and poverty. 

In  2011-2012,  Member  States  face  far-reaching  challenges  in  a  particularly  demanding 
context. Fiscal room for manoeuvre is very limited and there is discontent among citizens in 
several  Member  States  as  the  impact  of  the  crisis  makes  itself  felt.  However,  under  the 
pressure of events, many of the changes needed to remedy structural weaknesses, which have 
often been delayed for years, are now being considered or implemented. This is most obvious 
in  the  Member  States  receiving  assistance  from  the  EU,  other  Member  States  and  the  IMF, 
but it is also evident, to varying degrees, in all national programmes. 

In its assessment, the Commission acknowledges the breadth of the reforms already embraced 
by  the  Member  States  and  recognises  that  there  is  no  "one-size-fits-all"  solution,  and  no 
"silver bullet": not everything should or can be done by all at once. Yet, given the seriousness 
of the situation and the interdependences of our economies, the Commission is recommending 
actions at national level in the following areas identified in the Annual Growth Survey: 

Pre-requisites for growth 

•  With  24  Member  States  currently  in  excessive  deficit  procedure,  and  public 
debt  levels  still  worryingly  high,  most  governments  are  now  engaged  in  far-
reaching  fiscal  consolidation  efforts  and  confronted  with  the  task  of 
substantially  revisiting  the  levels  and  structures  of  both  their  expenditure  and 
revenue  sides  of  national  budgets.  The  adoption  of  reinforced  fiscal 
frameworks in some Member States, including through the use of expenditure 
ceilings and "debt brakes", is a positive  step forward.  Several Member  States 
are  also  reforming  their  public  administration  and  social  security  systems  in 
order to better control expenditure levels. The Commission considers that it is 
essential to stick to agreed deadlines for the correction of excessive deficits and 
to consolidate swiftly, moving towards the medium-term budgetary objectives 
specified by the Council. In this process, the Commission also calls for careful 
attention  to  be  given  to  the  quality  of  public  spending  and  tax  structures  to 

7 

With  the  exception  of  the  UK,  which  presented  qualitative  objectives  for  several  areas,  and 
Luxembourg, which recently withdrew its poverty target. 

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• 

• 

preserve  or  reinforce  growth-friendly  items,  such  as  investment  in  research, 
education and energy efficiency8. 

Progress  in  correcting  macro-economic  imbalances,  which  emerged  over  the 
last  decade,  has  been  slow  in  some  Member  States;  further  corrections  are 
required. In particular, those Member States with large current account deficits 
linked to sustained losses in competitiveness and to previously favourable debt 
financing  conditions,  must  take  further  steps  to  address  their  structural 
weaknesses.  In  some  instances,  this  may  involve  reviewing  wage-setting 
systems,  in  consultation  with  social  partners,  to  ensure  that  wages  support 
competitiveness  and  develop  in  line  with  productivity  growth.  In  other 
instances,  the  primary  challenge  is  to  proceed  with  productivity-enhancing 
structural  reforms  that  inter  alia  shift  economic  activity  towards  high  value-
added and  tradable sectors. In Member States with current account surpluses, 
some  offsetting  trends  can  be  observed.  There  is  scope  for  a  further 
strengthening of domestic demand which lies mainly in measures to bring more 
people into employment and open up the services and network markets.  

The  capacity  of  the  banking  sector  to  deliver  effectively  for  the  economy 
remains an area of concern in a number of Member States. The results of the 
new  bank  stress  tests,  which  will  be  published  shortly,  must  be  immediately 
followed  up  by  measures  to  address  remaining  vulnerabilities.  Besides  the 
ongoing regulatory overhaul at EU level, the Commission advocates a number 
of  systemic  reforms  aiming  at  the  modernisation  of  the  governance  and 
functioning  of  some  national  systems.  Several  Member  States  should  also 
consider  strengthening  their  regulatory  framework  for  mortgages  with  a  view 
to  preventing  housing  bubbles  and  reducing  over-indebtedness  of  private 
households. 

Mobilising labour markets, creating job opportunities  

•  Most Member States are engaged in reforming their pensions systems, both as 
a  way  to  curb  future  ageing-related  expenditure  as  their  populations  grow 
older,  and  to  create  additional  incentives  for  longer  working  lives.  Increasing 
the statutory retirement age and linking it to life-expectancy remain priorities, 
and  the  creation  of  automatic  or  formula-based  links  between  retirement  age 
and  life  expectancy  can  be  an  effective  tool.  Phasing  out  early  retirement 
schemes and boosting employability of workers over 50 are a necessary part of 
the policy response. Given the impact of the financial crisis on private pension 
funds,  Member  States  relying  on  a  two-  or  three-pillar  system  should  ensure 
the stand-alone viability of each of the pillars. In a number of Member States, 
the adequacy of pensions' level to ensure a decent standard of living in old age 
is or may become an issue. 

• 

In  several  Member  States,  the  crisis  has  led  to  drastic  increases  in 
unemployment, sometimes coupled with sharp falls in employment levels, and 
the  most  vulnerable  have  often  been  the  most  affected.  The  risks  for  certain 

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Which include the removal of environmentally harmful subsidies. 

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• 

• 

• 

people to fall into inactivity or exclusion may materialise if not prevented and 
tackled. Effective support measures and employment services are thus essential 
to help unemployed people find jobs and continue developing their skills. The 
situation  of  people  experiencing  poverty  and  other  particularly  vulnerable 
groups also calls for particular attention.  

Several  Member  States  should  be  more  pro-active  in  improving  education 
performances  and  access  to  lifelong  learning,  both  as  a  way  to  improve 
employability and to boost human capital. Particular efforts are needed in some 
Member  States  to  tackle  the  issue  of  early  school-leaving  and  to  provide 
apprenticeship  places  and  vocational  training.  Targeted  action  is  also 
recommended to tackle the high unemployment levels of young people. Many 
Member States are experiencing rapid ageing of their workforces and the return 
to  growth  raises  the  prospect  of  increasing  skills  bottlenecks:  matching 
educational and training outcomes with labour market needs is thus a priority. 

A number of Member States still suffer from the segmentation of their labour 
market with different types of contracts and need to move resolutely towards a 
more effective – and fair – combination of flexibility and security in working 
arrangements  ("flexicurity"),  including  by rebalancing employment  protection 
legislation, so as to stimulate job creation, labour market participation, mobility 
across sectors and human capital accumulation.  

Insufficient  attention  has  so  far  been  given  to  reducing  the  tax  wedge  on 
labour,  in  particular  for  low-wage  and  low-skilled  workers.  In  a  context  of 
fiscal consolidation, many Member States will be led to revisit both the tax and 
expenditure sides of the national budgets. It is generally recommended to shift 
taxation  away  from 
to  support 
environmental  objectives.  Further  action  is  also  needed  to  remove  social  and 
tax  obstacles  for  second  earners  to  join  or  remain  in  the  labour  force. 
Reviewing the tax and benefit systems, improving the availability of childcare 
and  allowing  for  more  flexible  forms  of  employment  are  recommended  as 
priorities in this context. 

labour  and  onto  consumption  and/or 

Frontloading growth  

• 

Several Member States are flagged as lagging behind with the implementation 
of the Services Directive9, unnecessarily delaying the dynamism of the services 
sector. A number of concrete steps are recommended so that they can tap into 
the potential of the single market to boost growth and create jobs, notably by 
removing unjustified barriers to entry or further opening professional services 
by removing quotas and closed shops, fostering greater competition in network 
industries and making more strategic use of the large amounts invested through 
public procurement. 

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Directive  2006/123/EC  of  the  European  Parliament  and  of  the  Council  of  12  December  2006  on 
services in the Internal Market. 

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• 

• 

• 

As  part  of  their  budgetary  consolidation  strategies,  Member  States  need  to 
consider  how  to  prioritise  expenditure  on  research  and  education  and  the  key 
infrastructures that are needed to sustain growth, whilst maximising the quality 
of spending and efficiency of services.  

There  is  a  need  to  improve  access  to  funding  for  innovative  companies,  in 
particular  venture  capital  for  SMEs,  and  to  help  SMEs  focusing  on  start-up 
conditions,  for  instance  simplifying  procedures  for  licences  and  permits, 
reducing the time and cost for granting them, and improving the protection of 
investors. 

Particular  emphasis  is  placed  on  the  need  for  a  number  of  Member  States  to 
promote  greater  energy  efficiency.  This  will  not  only  support  energy  security 
and  help  to  combat  climate  change  but  would  also  promote  the  spread  of 
innovative technologies and boost skilled job creation. 

A  number  of  Member  States  need  to  take  steps  to  reduce  administrative 
burdens on companies and to increase the capacity and performance of public 
administrations  and  of  the  judicial  system.  In  several  cases,  urgent  action  is 
needed  to  modernise  the  business  environment  by  reducing  red  tape  and 
increasing transparency in public procurement. Several Member States are also 
recommended to make better use of EU funds. 

Box 2. The Euro Plus Pact: taking stock of first commitments 

The Euro Plus Pact was agreed in March 2011 by Heads of State or Government of the Euro area and 
joined by Bulgaria, Denmark, Latvia, Lithuania, Poland and Romania. The purpose of the Pact is to 
strengthen  the  economic  pillar  of  the  monetary  union,  to  achieve  a  new  quality  of  economic  policy 
coordination, to improve competitiveness, thereby leading to a higher degree of convergence. The Pact 
focuses  primarily  on  areas  that  fall  under  national  competences  and  are  key  for  increasing 
competitiveness and avoiding harmful imbalances. It is designed to involve a special additional effort, 
including concrete commitments and actions that are more ambitious than those already agreed within 
the EU framework, accompanied with a timetable for implementation. These new commitments will 
be included in the NRPs and SCPs and be subject to the regular EU surveillance framework.  

Most  of  the  23  participants  have  presented  commitments  -  over  100  separate  measures  in  total  - 
relating  to  most  if  not  all  of  the  four  areas  covered  by  the  Pact:  to  foster  competitiveness,  to  foster 
employment, to contribute to sustainability of public finances and to reinforce financial stability.  

However, the degree of ambition and precision of these commitments are uneven:  

- Five members of the Pact have not yet communicated their commitments10. 

-  The  commitments  generally  focus  on  frontloading  growth-enhancing  reforms 
to  foster 
competitiveness, for instance in network industries, and the service sector. Many relate to employment 
actions  focusing  on  improving  educational  outcomes  and  skills.  Others  involve  fiscal  consolidation 
measures, for example by anchoring stricter fiscal discipline in national legislation. To a lesser extent, 
the  commitments  deal  with  the  reinforcement  of  financial  stability,  in  particular  by  reinforcing 
national supervision of financial actors. Aspects related to pragmatic coordination of tax policies, in 

10 

Finland, Greece, Latvia, Portugal and Slovenia. 

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the form of exchange of best practices, avoidance of harmful practices and proposals to fight fraud and 
tax evasion, would also deserve further attention in future.  

-  Some  members  commit  to  measureable  initiatives,  e.g.  to  implement  specific  legislation  or 
programmes  including  by  indicating  their  financial  volumes,  whilst  others  make  more  general 
commitments  to  reduce  unemployment  of  low-skilled  workers,  to  maintain  a  low  tax  burden,  to 
improve the business environment by reducing red tape or to implement EU directives.  

-  Even  where  specific  commitments  are  made,  the  majority  appears  to  relate  to  on-going  legislative 
projects rather than forward-looking reform projects initiated as a reaction to the Pact. So far, none of 
the  commitments  appear  to  reflect  the  focus  on  best  practices  and  benchmarking  against  best 
performers within Europe and vis-à-vis other strategic partners which is set out in the Pact. 

The Commission's assessment of the commitments is reflected in its recommendations. In many cases, 
a specific recommendation is made in areas which are more generally described in the commitments 
made  under  the  Pact,  for  example  in  areas  such  as  pension  reform,  labour  taxation  and  skills 
improvements. 

3. 

NEXT STEPS 

The  Commission  invites  the  European  Council  to  endorse  its  recommendations  at  its  June 
2011 meeting before formal adoption by the Council. 

At EU level, work will continue to follow up on the European semester:  

• 

• 

• 

• 

The legislator should adopt the new legislative package on the prevention and 
correction of imbalances and on the reinforcement of the Stability and Growth 
Pact. This will reinforce our collective tools to assess the situation and ensure 
adequate follow-up. 

In  the  light  of  the  country-specific  recommendations,  the  various  Council 
formations  should  examine  national  policies  and  performances  in  their  areas, 
monitor  implementation  and  carry  out  peer  reviews  on  specific  themes  to 
encourage mutual learning of interesting practices. 

Following on the specific recommendations addressed to its members, the Euro 
Group  should  intensify  its  policy  co-ordination  with  a  particular  focus  on 
identifying and preventing imbalances. It should also monitor implementation 
of the recommendations. 

As stated in the Euro Plus Pact, Heads of State or Government of participating 
Member States will monitor  their commitments politically. In the light of the 
Commission's  assessment  of  the  first  experience  of  the  Pact,  participating 
Member States should make their next commitments more specific, measurable 
and time-bound so that progress can be monitored. These commitments should 
be  anchored  in  the  development  and  implementation  of  the  National  Reform 
Programmes and Stability or Convergence Programmes.  

• 

The European Parliament should be given the opportunity to examine progress 
on the main elements of the Europe 2020 strategy and to present its views on 

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the  Commission's  next  Annual  Growth  Survey.  The  European  Economic  and 
Social Committee and the Committee of the Regions also have a role to play in 
this respect. 

• 

The  Commission  will  take  stock  of  progress  in  implementing  the  country-
specific recommendations, first at EU level in its next Annual Growth Survey 
in January 2012, and then for each Member State in its guidance to follow next 
year. It will continue to support Member States efforts through EU level action 
to implement the Europe 2020 flagships and by intensifying efforts to unlock 
the potential of the Single Market, including through the Single Market Act. 

The conclusion of the first European semester marks the opening of a "national semester": in 
the second semester of this year, it will be for the Member States to discuss and incorporate 
European guidance into their 2012 budgets and national decision-making, also in view of the 
preparation of the next national programmes foreseen in Spring 2012.  

While some Member States may have chosen cautious targets and measures in this first year 
in  the  light  of  current  difficulties,  additional  efforts  will  be  required  in  the  coming  years  to 
make  sure  that  the  EU  is  investing  sufficiently  in  smart,  sustainable  and  inclusive  growth. 
Member  States  need  to  do  more  to  protect  expenditure  on  research  and  education  and  key 
infrastructures. They should open up more opportunities in the services' sector, including by 
breaking  down  barriers  to  job  creation  and  competition  in  key  network  industries  and  by 
deciding  rapidly  on  the  measures  proposed  in  the  Single  Market  Act.  Most  Member  States 
could  do  more  to  improve  the  business  environment,  through  better  regulation,  less  gold 
plating and by improving the access of SMEs to finance. Measures to implement "flexicurity" 
and to adapt skills to labour market needs should be pursued.  

In  their  pursuit  of  fiscal  consolidation  and  structural  reforms,  Member  States  need  to  find 
ways of tackling the social impact of the changes now underway. In the Europe 2020 strategy, 
the EU chose to have a social inclusion target, with the aim of lifting 20 million people out of 
poverty and exclusion by 2020. The trends visible in many countries highlight a growing risk 
of poverty and marginalisation unless active measures are taken to counter them. On the basis 
of  the  actions  described  in  the  national  programmes,  Member  States  need  to  do  more  to 
deliver on this target. 

To build the legitimacy and effectiveness of the new EU economic governance, the Member 
States  should  decide  on  the  best  ways  to  involve  their  national  parliaments,  as  well  sub-
national  authorities  and  other  stakeholders,  in  the  development  and  follow-up  of  their 
programmes.  The  Commission  stands  ready  to  assist  and  engage  in  national  discussions  as 
part of this new, stronger EU economic governance.  

We need to use the momentum for change driven by the crisis to help the EU emerge stronger 
and fitter for the future, well able to compete with confidence and success in global markets. 
This first European semester is a crucial step towards achieving our Europe 2020 objectives 
and marks a qualitative change in the economic policy co-ordination and governance of the 
EU. By stepping up national action and by working together at EU level we are better placed 
to deliver sustainable growth and to help our citizens realise their hopes for the future. 

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