COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN CENTRAL BANK, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK Annual Sustainable Growth Survey 2022
Date: 2021-11-24
Institutions: European Commission, Secretariat-General
Subjects: EU growth strategy, European Semester, coronavirus disease, digital single market, economic recovery, economic stabilisation, epidemic, green economy, sustainable development, vaccination

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 24.11.2021  COM(2021) 740 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN CENTRAL BANK, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF THE REGIONS AND THE EUROPEAN INVESTMENT BANK Annual Sustainable Growth Survey 2022  
 
 
1.  Introduction 

Europe’s  achievements  in  rolling  out  the  COVID-19  vaccination  campaign  and 
mitigating  the  socio-economic  impact  of  the  pandemic,  have  laid  the  ground  for  a 
sustained  recovery.  Close  to  three  quarters  of  adult  Europeans  are  now  fully  vaccinated, 
placing the EU among the world’s leaders in this respect. Moreover, Europe delivered over 1 
billion  doses  to  the  rest  of  the  world  –  more  than  the  number  delivered  at  home.  Fostering 
vaccination, also in light of strong differences in vaccination rates across Member States, and 
all  over  the  world  continues  to  be  a  top  policy  priority.  In  parallel,  the  unprecedented 
coordinated policy response to the pandemic at EU and national level has been successful in 
cushioning the socio-economic fallout from the crisis1.  

Our  efforts  in  dealing  with  the  immediate  effects  of  the  COVID-19  shock  are  bearing 
fruit. For 2021, GDP in the euro area and in the EU is expected to grow by 5.0%. As the EU 
economy  moves  from  recovery  to  expansion,  supported  by  an  improving  labour  market, 
favourable financing conditions and the forceful deployment of the Recovery and Resilience 
Facility,  real  GDP  growth  in  the  EU  is  projected  at  4.3%  in  2022  and  2.5%  in  2023.  The 
unemployment  rate  continues  to  decline,  though  it  remains  marginally  above  its  pre-crisis 
level. Going forward, we expect employment creation to continue in tandem with the recovery 
and  the  unemployment  rate  to  decline  to  6.7%  in  2022  and  to  fall  further  to  6.5%  in  2023, 
down to its pre-crisis level. Inflationary pressures have increased due to rising energy prices 
and  supply  disruptions.  After  peaking  at  4%  at  the  end  of  2021,  inflation  is  expected  to 
moderate to 1.4% in 2023. Going forward, uncertainty and risks remains high, including the 
evolution of the pandemic, both within and outside the EU. 

Economic  policy  coordination  has  gradually  shifted  to  laying  the  foundations  for  a 
transformational and inclusive recovery and stronger resilience. Economic activity needs 
to  be  increasingly  aligned  with  the  four  dimensions  of  competitive  sustainability,  i.e. 
environmental sustainability, productivity, fairness, and macroeconomic stability2. These four 
dimensions should not be seen in isolation, as they reinforce each other with a common goal: 
shifting towards a sustainable, resilient and inclusive economic model, enabled by a broader 
diffusion  and  uptake  of  digital  and  green  technologies,  which  will  help  to  make  Europe  a 
transformational  leader.  Europe’s  economic,  social  and  environmental  policy  agenda  should 
thus  ensure  that  governments  at  all  levels,  businesses,  social  partners  and  households 
contribute  consistently  towards  reaching  our  targets  for  the  green  and  digital  transitions,  as 
well as the employment, skills and poverty reduction targets set with the European Pillar of 
Social  Rights  Action  Plan,  while  ensuring  the  stability  of  our  economy,  the  smooth 
functioning of the Single Market and leaving no one behind. 

The Union has put forward an ambitious policy agenda to steer a sustainable, fair and 
inclusive recovery and to make the EU’s economy more resilient to future shocks, while 
transforming  our  economies  and  societies  in  line  with  the  ambition  of  the  twin 
transitions. Since last year’s Annual Sustainable Growth Strategy, the Union’s green, digital 

1 European Commission, “The EU economy after COVID-19: implications for economic governance”, 
COM(2021) 662 final, 19 October 2021. 
2  European  Commission,  “Annual  Sustainable  Growth  Strategy  2020”,  COM(2019)  650  final,  17  December 
2019. 

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and social  ambitions  have increased to  deal  with  the  mounting  challenges we  are facing.  In 
July 2021, the Commission tabled a first set of Fit for 55 proposals3 to make climate, energy, 
land use, transport and taxation policies fit for  reducing  net  greenhouse  gas emissions  by  at 
least  55%  by  2030,  an  objective  enshrined  in  the  European  Climate  Law.  The  Commission 
has adopted a zero pollution action plan and will continue to roll out its European Green Deal 
agenda to protect, conserve and enhance natural  capital and decouple  GDP growth from the 
use  of  natural  resources.  Moreover,  in  September  2021  the  Commission  proposed  a  new 
governance  framework  to  help  ensure  that  the  EU  achieves  its  objective  of  a  digital 
transformation of European society and economy4. The proposal envisages the preparation of 
national strategic roadmaps to attain the projected trajectories for each Digital Decade target, 
as  well  as  tools  to  accelerate  and  facilitate  digital  multi-country  projects.  To  address  the 
adverse  effects  of  the  pandemic,  to  contribute  to  achieving  upward  social  and  economic 
convergence  but  also  to  strengthen  the  Union's  drive  towards  a  digital,  green  and  fair 
transition, the Porto Social Summit of May 2021 reaffirmed the joint commitment to  further 
implement the European Pillar of Social Rights and welcomed the new EU headline targets on 
jobs,  skills  and  poverty  reduction5.  A  stable  economy  allowing  for  policies  focused  on  the 
long term and a just transition for those most affected by the transformations are prerequisites 
for achieving those high ambitions.  

The  Recovery  and  Resilience  Facility,  as  part  of  the  direct  EU  response  aiming  to 
emerge stronger from the pandemic, will play a central role in delivering a resilient EU 
economy fit for the twin transitions. The Facility, embedded in the European Semester of 
economic and employment policy coordination, will be the key tool to implement the policy 
agenda  in  the  months  and  years  ahead.  Implementation  of  the  broad  sets  of  ambitious  and 
mutually  reinforcing  measures  in  the  recovery  and  resilience  plans  will  be  instrumental  in 
stimulating  economic  activity  and  employment  and  delivering  fair  and  inclusive  green  and 
digital  transitions.  One  of  the  Facility’s  main  innovative  features  is  its  performance-based 
nature.  The  funds  will  be  disbursed  as  Member  States  implement  the  coherent  investments 
and reforms agreed in their plans. This will ensure that both types of measures are rolled out 
in  parallel,  addressing  existing  policy  gaps  and  challenges  and  removing  bottlenecks  to 
investment and more sustainable and inclusive GDP growth.  

With the approval of the recovery and resilience plans and the first funds disbursed to 
Member States, the focus now  crucially turns to the implementation phase. At the time 
this Communication was adopted, 22 recovery and resilience plans had been endorsed by the 
Commission and approved by the Council. This has unlocked pre-financing disbursements of 
EUR 52.3 billion for 17 Member States since August 2021. Overall, the plans approved by the 
Council so far represent EUR 291 billion in non-repayable financing and EUR 154 billion in 
loans. All attention should now focus on the implementation of reforms and investments by 
the Member States in line with the agreed milestones and targets, to spur the recovery and job 

3 European Commission, “'Fit for 55': delivering the EU's 2030 Climate Target on the way to climate neutrality”, 
COM(2021) 550 final, 14 July 2021.  
4 European Commission, “Proposal for a decision of the European Parliament and of the Council 
establishing  the  2030  Policy  Programme  ‘Path  to  the  Digital  Decade’”,  COM(2021)  574  final,  15  September 
2021. 
5 These ambitious EU targets are: at least 78% of the population aged 20 to 64 in employment; at least 60% of all 
adults participating in training every year; and a reduction of at least 15 million in the number of people at risk of 
poverty or social exclusion. 

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creation,  strengthen  European  resilience  and  ensure  a  lasting  impact  on  the  EU’s  society, 
economy  and  environment.  The  Commission’s  Technical  Support  Instrument  is  helping  the 
implementation of the recovery and resilience plans. During this phase, the Commission will 
stay in close dialogue with Member States and ensure the proper involvement of the European 
Parliament  and  the  Council,  regional  and  local  authorities,  social  partners,  civil  society  and 
other key stakeholders.  

It  is  important  to  ensure  the  complementarity  and  consistency  of  the  reforms  and 
investments included in the recovery and resilience plans with investments to be funded 
under  cohesion  policy  and  other  EU  instruments  in  the  years  to  come,  as  well  as 
measures funded at national level. To unlock the overall EUR 500 billion in funding under 
cohesion  policy,  the  swift  completion  of  discussions  on  the  Partnership  Agreements  and 
Programmes under the new programming period, including under the Just Transition Fund, is 
a priority in the coming year. Reaching the ambitious objectives of the EU policy agenda for 
the  twin  transitions  will  require  a  coordinated  effort  by  all  Member  States,  mobilising 
available public and private funding towards reaching these objectives. 

This  year’s  Annual  Sustainable  Growth  Survey  outlines  the  policy  priorities  in  the 
coming  year  and  provides  guiding  principles  for  implementing  them  in  the  2022 
European  Semester  cycle.  The  European  Semester  provides  a  well-established  framework 
for  coordinating  the  economic  and  employment  policies  of  the  Member  States  and  will 
continue to play this role in the recovery phase and in advancing on the twin transitions. Like 
in  previous  years,  the  policy  priorities  will  be  structured  around  the  four  dimensions  of 
competitive  sustainability  and  in  line  with  the  Sustainable  Development  Goals.  The 
Communication  also  sketches  out  the  main  characteristics  of  the  2022  European  Semester 
cycle  and  explains  the  main  changes  compared  to  previous  cycles,  taking  into  account  the 
need to adapt to the processes under the Recovery and Resilience Facility.  

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2.  The four dimensions of competitive sustainability as guiding principles for the 

EU’s recovery 

Launched  at  the  start  of  the  current  Commission’s  term  of  office,  the  four  complementary 
dimensions of the EU’s competitive sustainability’s agenda, i.e. environmental sustainability, 
productivity,  fairness  and  macroeconomic  stability,  are  more  relevant  than  ever.  These 
dimensions,  which  are  closely  interrelated  and  should  be  mutually  reinforcing,  have  guided 
the  Member  States’  reform  and  investment  agendas  over  the  past  years  and  feature 
prominently among the objectives of the Recovery and Resilience Facility.  

Europe has chosen to be a transformational frontrunner to embrace the opportunities found in 
environmental protection and the fight against climate change as well as in the field of digital 
technologies.  Ensuring  that  the  four  dimensions  of  competitive  sustainability  are  mutually 
reinforcing is a key transformational challenge of economic and social policies. A sustainable 
economy allowing for policies focused  on the long term and an inclusive and fair transition 
for  all  EU  citizens  and  regions  will  remain  at  the  heart  of  the  EU’s  recovery  agenda. 
Important to remember in that context is that competitive sustainability and resilience are two 
sides of the same coin. Indeed, as stated in the 2020 Strategic Foresight Report6, resilience is 
the ability not only to withstand and cope with challenges but also to undergo transitions in a 
sustainable, fair and democratic manner. 

Figure 1: The four dimensions of competitive sustainability and their links 

6 European Commission, “2020 Strategic Foresight Report: charting the course towards a more resilient Europe”, 
COM(2020) 493 final. 

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2.1  Environmental sustainability  

Climate change and environmental degradation call for immediate action. In the course 
of  2021,  Europe  faced  severe  heatwaves,  forest  fires  and  floods  that  showed  clearly  and 
painfully the impact that climate change can have on our lives and livelihoods. In addition, the 
overall economic impact linked to climate change is increasing and deserves close attention. 
The  costs  of  non-action  are  significantly  higher  than  the  costs  of  fulfilling  our  climate 
ambitions. As a result, it is essential to ensure that the economic recovery goes hand in hand 
with the fast-forwarding of the green transition and to put the economy on track to deliver on 
the EU’s commitment to become the first climate neutral continent by 2050. 

The Commission has put forward an ambitious green reform agenda, which now needs 
to be implemented swiftly. We should use the period ahead to enable the necessary reforms 
and investments to decarbonise the EU economy and to ensure a socially fair green transition. 
The  European  Green  Deal,  and  in  particular  the  Fit  for  55  package,  is  laying  the  building 
blocks  for  the  EU  economy  of  tomorrow.  Landmark  strategies  on  climate  and  energy, 
hydrogen,  offshore  renewable  energy,  tackling  methane  emissions,  biodiversity,  circular 
economy,  zero  pollution,  sustainable  and  smart  mobility,  renovation  wave,  sustainable  food 
and many others are guiding reforms and investments. The proposed initiatives include green 
taxation  measures,  such  as  the  updated  Energy  Taxation  Directive,  to  align  EU  tax  and 
climate policies and incentivise green business models, while mitigating the social impact. In 
addition,  the  proposed  Carbon  Border  Adjustment  Mechanism  will  put  a  carbon  price  on 
certain  imports  and  thus  encourage  firms  and  governments  in  the  rest  of  the  world  to  take 
steps  in  the  same  direction.  At  national  level,  the  implementation  of  the  recovery  and 
resilience  plans  will  enable  green  reforms  helping  to  bridge  part  of  the  greenhouse  gas 
emissions gap. Several Member States have put forward in their recovery and resilience plans 
energy  efficiency  reforms,  facilitation  of  permitting  procedures  for  renewables,  support  for 
green research and innovation7, or tax incentives to promote sustainable mobility models.  

Meeting the EU’s ambitious Green Deal agenda will require significant investment.  For 
the  next  decade,  the  additional  private  and  public  investment  needs  to  cater  for  the  green 
transition are estimated at nearly EUR 520 billion per year8. The 22 recovery and resilience 
plans  approved  to  date  are  expected  to  provide  a  boost  to  green  investments  of  at  least 
EUR 192  billion9  cumulatively  over  the  next  six  years,  covering  areas  such  as  energy 
generation, building renovation, sustainable transport and climate adaptation. Cohesion policy 
will  deliver  about  EUR 150  billion  in  green  investments  during  this  decade.  Further 
significant investments will be needed to accompany the necessary labour market transitions 
and  support  reskilling  and  upskilling,  both  pre-conditions  for  a  just  and  effective  transition. 
But  public  funding  will  neither  be  sufficient  to  meet  the  massive  investment  needed  to 
successfully  accomplish  the  green  transition,  nor  should  it  crowd  out  private  investment. 
Helping  to  channel  private  funding  towards  climate  resilience,  including  by  creating  an 
enabling  framework,  fostering  further  development  of  capital  markets  in  the  area  of 
sustainable  finance,  improving  the  coordination  of  public  and  private  R&D  investment  and 

7 European Commission, “Communication on European Missions”, COM(2021) 609 final, 29 September 2021. 
8  See  box  2  in  European  Commission,  “The  EU  economy  after  COVID-19:  implications  for  economic 
governance”, COM(2021) 662 final. 
9 Preliminary Commission staff estimates. 

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providing  targeted  support,  will  be  a  key  role  for  the  public  sector.  It  will  therefore  be 
important  to  use  the  public  investment  and  reforms  included  in  the  recovery  and  resilience 
plans to help mobilise private investment. 

The  social  dimension  is  at  the  heart  of  the  EU’s  ambitious  green  agenda.  The  green 
transition  will  create  massive  opportunities,  bringing  with  it  job  creation,  innovation,  and 
increased resilience to shocks. At the same time, it will mean profound change, especially for 
the most disadvantaged, as well as for some regions and sectors such as coal mining regions 
and  sectors  affected  by  the  industrial  transition  and  related  restructuring  processes,  often 
implying jobs and revenue losses. This is why the European Green Deal aims to ensure a fair 
distribution of the efforts required,  with  all sectors of the economy and society contributing 
and with specific measures for those in need10. The Commission has proposed a new Social 
Climate Fund to support vulnerable low and middle-income households, transport users and 
micro-enterprises who would be most affected  by the introduction of carbon pricing in road 
transport  and  buildings.  Under  the  European  Semester  framework,  we  will  monitor  social 
impacts closely and, where relevant, propose targeted recommendations to ensure that no one 
is  left  behind.  Complementarity  with  the  measures  supported  under  the  Recovery  and 
Resilience  Facility  will  be  a  priority.  To  guide  Member  States  in  taking  advantage  of  the 
opportunities  and  minimising  the  socio-economic  risks  of  the  green  transition,  the 
Commission  will  propose  a  Council  Recommendation  on  addressing  the  employment  and 
social aspects of the climate transition before the end of the year.  

The clean energy transition is our best insurance against energy price shocks. The sharp 
spike in energy prices that the EU is currently facing, principally driven by increased global 
demand for energy and gas in particular, is of high concern for all EU citizens, businesses and 
the  economy  at  large.  The  increase  in  energy  prices  affects  low-  and  lower  middle-income 
households  to  a  comparatively  higher  extent  and  risks  aggravating  energy  poverty.  The 
Commission  has  presented  a  toolbox11  of  measures  for  addressing  the  challenges  and 
mitigating the impact of temporary energy price increases in a coordinated way. In the short 
term, time-limited emergency income support to  vulnerable households,  measures to protect 
business,  and  targeted  tax  reductions  can  help  cushion  the  impact.  More  structurally, 
improvements  in  energy  efficiency,  the  electrification  of  energy  demand  and  continued 
investment  in  renewable  and  low-carbon  energy  together  with  facilitation  of  its  deployment 
are key to ensure affordable energy prices in the future. The green transition fosters the use of 
local,  renewable  energy,  decreasing  our  dependency  on  foreign  energy  sources  while  at  the 
same  time  increasing  energy  efficiency,  thus  lowering  our  energy  needs.  Addressing  the 
negative  effects  of  sudden  price  hikes  and  ensuring  affordability  without  fragmenting  the 
European  single  energy  market  is  essential  to  avoid  jeopardising  investments  in  the  green 
transition of the energy and industrial sectors. 

The  green  transition  is  designed  to  safeguard  our  prosperity  and  well-being  while 
creating  opportunities.  Investments  and  reforms  to  reduce  air,  water  and  soil  pollution  at 

10  The  Just  Transition  Mechanism,  including  the  Just  Transition  Fund,  will  provide  targeted  support  for 
economic diversification and job creation in the territories facing most serious socio-economic challenges arising 
from the transition towards climate neutrality. 
11  European  Commission,  “Tackling  rising  energy  prices :  a  toolbox  for  action  and  support”,  COM(2021)  660 
final, 13 October 2021.  

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source will save the economy important costs, such as for healthcare, lost workdays, damages 
to  buildings  and  crop  losses.  Improving  environmental  infrastructure  (for  example,  in  the 
areas  of  water  and  waste),  protecting  and  restoring  biodiversity  and  natural  ecosystems  as 
well as ensuring sustainable food systems will strengthen our resilience, create new business 
opportunities and improve public health. Phasing out environmentally harmful subsidies and 
using  economic  instruments  to  implement  the  polluter  pays  principle  will  provide  further 
incentives and financing for the green transition. 

Digitalisation  can  greatly  contribute  to  the  green  transition.  The  green  and  digital 
transitions are intrinsically linked and neither can succeed without the other. Digitalisation of 
society will contribute to reducing its carbon footprint, for example through a more efficient 
use  of  energy  and  resources.  At  the  same  time,  digital technologies need  to  become  cleaner 
and  more  energy  efficient.  The  recovery  and  resilience  plans  contain  several  measures  to 
ensure a smart and sustainable use of resources, including the greening of digital technologies 
which  requires  among  other  the  building  of  adequate  skills.  The  EU  is  also  exploring 
voluntary and binding measures to help the private sector become climate neutral and to use 
more renewable resources, such as the European Green Digital Coalition. 

2.2 Productivity  

Ensuring  future  prosperity  for  citizens  will  depend  crucially  on  Europe’s  ability  to 
increase  productivity  and  innovation.  This  will  require  a  well-aligned  mix  of  reforms 
and  private  and  public  investments  that  underpin  competitiveness  and  job  creation. 
Productivity  growth  is  a  critical  driver  of  economic  prosperity,  well-being  and  convergence 
over the long run. However, productivity growth in the EU has been slowing down over the 
past decades, and the trend continues. The ability of EU businesses to adopt new technologies, 
in  particular  digital  technologies,  scale  up  their  activities  and  update  their  modes  of 
production will play a crucial role in boosting their productivity and competitiveness both in 
the Single Market and globally. This hinges upon upskilling and reskilling the labour force to 
master  tomorrow’s  production  models.  It  also  depends  on  enabling  reforms  that  create  a 
framework  conducive  to  such  technological  adaptation  and  innovation,  such  as  better 
coordination of research and innovation policies, strengthening the transfer and valorisation of 
knowledge  and  supporting  development  and  adoption  of  technologies  by  companies,  in 
particular SMEs and startups. Unlocking private investment spending through targeted public 
support measures is essential in this respect.  

A well-functioning Single Market, where fair and effective competition12 is ensured, is in 
itself a major source of productivity for the EU economy. Technological advances spread 
faster in a unified market and well-functioning and competitive product and services markets 
are  a  key  driver  of  productivity  growth,  as  they  enable  a  more  efficient  allocation  of 
resources.  The  COVID-19  crisis  has  highlighted  the  need  to  uphold  the  free  movement  of 
persons, goods, services and capital in the Single Market. The concrete measures announced 

12 The Commission is conducting a comprehensive review of competition policy; European Commission, “A 
competition policy fit for new challenges”, COM(2021) 713 final, 18 November 2021. 

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in  the  Annual  Single  Market  Report13,  such  as  a  structural  solution  to  ensure  the  four 
freedoms in case of future crises (the Single Market Emergency Instrument) and the analysis 
of potential solutions to address the identified supply shortages will be key to strengthen the 
resilience of the Single Market. Respect for the rule of law, in particular independent, quality 
and efficient justice systems,  effective anti-corruption structures, anti-money laundering and 
anti-fraud  frameworks,  are  important  factors  of  the  business  environment  and  of  the 
functioning  of  the  Single  Market.  In  addition  to  the  European  Semester,  the  Commission’s 
Rule of Law Report also covers in one of its pillars the functioning of justice systems.  

Member  States’  recovery  and  resilience  plans  envisage  a  wide  set  of  reforms  aimed  at 
improving  the  business  environment  and  favouring  adoption  of  digital  and  green 
technologies. These reforms will be complemented by important efforts to digitalise strategic 
sectors of the public administration and the judiciary. This effort directly responds to country-
specific  recommendations  addressed  to  Member  States  in  previous  years  in  areas  such  as 
implementing competition enhancing reforms, making public procurement more dynamic and 
transparent,  strengthening 
the  efficiency  of  public 
administration  including  tax  administration,  promoting  legislative  simplification,  further 
developing  e-government  and  e-justice  services  and  promoting  well-functioning  insolvency 
frameworks.  Full  implementation  of  those  reforms  is  expected  to  improve  the  business 
environment across the EU while fostering further digital innovation, with a positive impact 
on  productivity.  This  will  have  wider  positive  impacts,  e.g.  by  creating  quality  jobs  and 
enhancing fiscal sustainability. 

judicial  system, 

increasing 

the 

Investment in the adoption of advanced digital technologies and research and innovation 
is critical to deliver on the digital transition. A significant digital investment gap exists in 
the  European  private  sector  with  respect  to  other  jurisdictions14.  The  adopted  recovery  and 
resilience  plans  aim  to  contribute  EUR  117  billion  to  the  digital  transformation.  Support  is, 
for  example,  directed  to  digital  innovation,  R&I  and  advanced  digital  technologies  EUR  17 
billion,  including  the  development  of  artificial  intelligence  or  supercomputing.  In  addition, 
significant funds are dedicated to the support of the digital transformation of public services 
(EUR 43 billion) or companies (EUR 24 billion) most of them benefiting small and medium-
sized  enterprises  (SMEs).  Also  connectivity  measures,  e.g.  the  roll-out  of  5G  networks,  are 
covered in several plans (EUR 13 billion). Programmes under EU cohesion policy funds, as 
well  as  other  programmes  within  the  EU  budget,  are  expected  to  also  increase  substantially 
the  investment  in  digital  research  and  innovation  activities  compared  to  the  previous 
programmes. 

These  investments  in  technology  need  to  be  complemented  by  investing  in  people  and 
skills, in particular reinforced digital skills, through reforms of education  and training 
systems  and  via  upskilling  and  reskilling  programmes.  The  acceleration  of  the  digital 
transition is greatly increasing the demand for digital skills. Science, technology, engineering 
and  mathematics  (STEM)  skills  are  essential  to  enable  the  development  and  adoption  of 

13  European  Commission,  “Annual  Single  Market  Report  2021  Accompanying  the  Communication  ‘Updating 
the 2020 New Industrial Strategy: Building a stronger Single Market for Europe's recovery’”, SWD(2021) 351 
final, 5 May 2021. 
14  For  an  illustration  of  the  investment  gap  with  the  EU’s  main  competitors,  see  Table  2  in  European 
Commission,  “Identifying  Europe's  recovery  needs  accompanying  the  Communication  ‘Europe's  moment: 
Repair and Prepare for the Next Generation’”, SWD(2020) 98 final, 27 May 2020. 

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advanced digital technologies across our economies. To ensure a sufficient number of highly 
skilled  more  efforts  are  needed  to  support  young  people,  especially  women  and  girls.  This 
should  come  together  with  increasing  the  prevalence  of  at  least  basic  levels  of  digital  and 
software skills in the whole population. People of working age need easy access to affordable 
and relevant training which meets their skills needs. This is important across economic sectors 
and firms, especially SMEs. Digital skills are also an important enabler of the green transition. 
The Recovery and Resilience Facility will contribute significant amounts to the development 
of  skills  (the  adopted  plans  contribute  EUR  47  billion  to  measures  supporting  education, 
training  and  skills  in  all  age  groups),  with  a  particular  focus  on  digital  skills  (EUR  20 
billion)15.  

Furthermore,  responsible  access  to  resources,  resource  efficiency  and  productivity  are 
not  only  important  for  environmental  welfare  but  also  for  economic  welfare.  The  EU 
needs to accelerate the transition towards an economic system that uses resources in a smarter 
and more sustainable manner, with a view to reducing the consumption footprint. Building on 
the  Single  Market  and  the  potential  of  digital  technologies,  the  circular  economy  can 
strengthen the EU’s industrial base and foster business creation and entrepreneurship among 
SMEs, while strengthening the EU’s resilience and open strategic autonomy. For the public, 
the  circular  economy  will  provide  high-quality,  functional  and  safe  products,  which  are 
efficient  and  affordable,  last  longer  and  are  designed  for  reuse,  repair,  and  high-quality 
recycling. A whole new range of sustainable services, product-as-service models and digital 
solutions will bring about a better quality of life, innovative jobs and upgraded knowledge and 
skills.  

The resilience of the EU economy depends on robust supply chains. Swift implementation 
of  the  Industrial  Strategy  and  its  2021  update16  is  key  to  curb  strategic  dependencies  and 
mitigate  temporary  or  persistent  bottlenecks  in  the  international  supply  chains  of  essential 
inputs for Europe’s industrial ecosystems. The EU is a major global importer and exporter and 
enjoys a high degree of openness to trade and investment. Global logistics crunches, such as 
the ones that the EU is experiencing in computer chips and certain raw materials, influence a 
variety  of  industrial  ecosystems,  including  pro-cyclical  industries  like  the  automotive  and 
construction  industries.  Supply  chain  bottlenecks  have  a  negative  impact  on  firms’ 
productivity levels, employment, turnover and entry-exit rates and they may impact the EU’s 
capacity to respond to a health crisis The EU’s increased ambitions on the green and digital 
transitions require a policy shift to address current or future  strategic dependencies on those 
products and technologies that will be driving Europe’s industrial transformation, thereby also 
addressing underlying security of supply concerns. The Commission will present a European 
Chips Act to better coordinate EU efforts in research and the design of semi-conductors and 
facilitate their manufacturing in Europe. 

15 Measures supporting education, training and skills are accounted for as part of social expenditure, while digital 
skills are included in the digital contribution.  
16  European  Commission,  “Updating  the  2020  New  Industrial  Strategy:  Building  a  stronger  Single  Market  for 
Europe’s recovery”, COM(2021) 350 final, 5 May 2021. 

9 

 
 
 
                                                           
2.3 Fairness  

Fairness needs to be at the heart of the recovery from the COVID-19 pandemic-induced 
downturn. The crisis has unevenly impacted different population groups, sectors and regions. 
In  particular,  the  youth  and  low-skilled  workers  and  those  with  a  migrant  background  were 
disproportionately  hit.  Women  and  men  have  been  differently  impacted17.  The  temporary 
Support  to  mitigate  Unemployment  Risks  in  an  Emergency  (SURE)  has  successfully 
contributed to addressing the negative economic and social consequences of the pandemic. As 
the economy recovers, we are likely to observe further changes in the distribution of jobs. The 
pandemic  has  brought  about  or  accelerated  trends  of  changes  in  demand,  consumption 
patterns and business  models.  Across the  economy, new jobs  are being  created, while other 
job  functions are becoming less  sought  after. This implies a large amount of job  transitions 
and the re-emergence of labour shortages in some Member States and sectors. In this context, 
increasing attention should be given to improving the capacity of labour markets to anticipate 
and  adapt  to  changes,  while  leaving  no  one  behind.  Tax  benefit  reforms  can  help  reduce 
inequalities and encourage labour market participation.  

The COVID-19 pandemic had an asymmetric impact on European regions, due to their 
different  economic  specialisations.  Regions  dependent  on  tourism  have  been  particularly 
impacted, but other, contact-intensive services have also been strongly affected. Other sectors 
were  less  affected  but  still  experienced  a  drop  in  activity,  notably  manufacturing  and 
construction.  The  number  of  hours  worked  declined  most  significantly  between  2019  and 
2020  in  Greece,  Spain,  Portugal  and  Italy,  and  especially  in  regions  with  large  tourist 
economies.  Lastly,  more  economically  developed  EU  regions  were  less  affected  than  less 
economically developed regions and regions in transition. 

Going forward, well-designed and effective active labour market policies, coupled with 
appropriate  support  by  public  employment  services  and  social  protection  systems,  are 
key  to  accompany  workers  during  the  green  and  digital  transitions.  In  this  respect,  the 
Commission  Recommendation  for  Effective  Active  Support  to  Employment  (EASE)18 
highlights  the  importance  of  developing  and  implementing  coherent  policy  packages, 
including hiring and transition incentives, upskilling and reskilling, and enhanced support by 
public employment services. Due attention should be devoted to the youth that that has been 
particularly strongly hit by the COVID-19 pandemic. Long-standing challenges in relation to 
an ageing workforce and labour market participation of women and persons with disabilities 
should be addressed too. 

The  role  of  education,  training  and  skills  as  key  determinants  of  social  inclusion  and 
economic  growth  must  be  reinforced,  taking  into  account  the  challenges  and 
opportunities  of  the  twin  transitions.  The  COVID-19  crisis  brought  about  disruptions,  in 
part  due  to  an  uneven  access  to  online  learning,  and  a  negative  impact  on  pupils’  mental 
health.  This  may  have  long-term  consequences,  including  low  levels  of  basic  skills  and 
suboptimal educational outcomes, and therefore exacerbate existing inequalities in education. 
Member States will need to intensify their efforts to improve learning outcomes across their 

17 European Institute for Gender Equality, “Gender Equality Index 2021 Report”, November 2021. 
18 European Commission, “Recommendation (EU) 2021/402 of 4 March 2021 on an effective active support to 
employment following the COVID-19 crisis (EASE)”, C/2021/1372, OJ L 80, 8.3.2021. 

10 

 
                                                           
education  and  training  systems.  In  parallel,  lifelong  learning  should  be  fostered  to  address 
existing and emerging skills mismatches, in particular those related to the twin transitions, by 
significantly increasing adults’ participation in upskilling and reskilling. Meeting the EU-level 
targets on education, training and skills development will facilitate the success of digital and 
green  transitions  and  address  the  related  challenges  in  terms  of  skills  adaptation  needs.  In 
particular, reforms will be needed to reduce educational inequalities, address the urban-rural 
divide,  including  on  digital  connectivity,  reduce  the  risk  of  early-school  leaving  and 
underachievement  and  ensure  skills  development  opportunities  for  all  adults,  regardless  of 
their level of qualification. A reinforced role of universities in enhancing quality and labour 
relevance  of  higher  education  and  promoting  inclusion,  diversity  and  gender  equality  is 
equally important. 

Implementing the European Pillar of Social Rights is crucial to achieving upward social 
and  economic  convergence.  The  Commission’s  Action  Plan  on  the  implementation  of  the 
Pillar proposed new EU targets on employment, skills and poverty reduction by 2030, as well 
as a revised Social Scoreboard, with a view to their integration in the European Semester. The 
proposal  for  the  2022  Joint  Employment  Report,  as  part  of  this  Autumn  package,  has  a 
reinforced focus on the Pillar’s principles and integrates the 2030 EU headline targets and the 
headline indicators of the revised Social Scoreboard in its analysis. The report shows that the 
labour market recovery is clearly taking hold, but also warns about emerging labour shortages 
as well as  persistently low employment rates of  young people and women. The recovery  as 
well  as  the  green  and  digital  transitions  increase  the  likelihood  that  some  jobs  will  not  be 
reinstated, which makes  it important  to  support job transitions,  especially in  terms  of active 
labour market policies and upskilling and reskilling measures. The report also underlined the 
importance  of  strong  social  protection  systems,  which  in  most  Member  States  helped  to 
mitigate the drop in household incomes, and to keep the share of people at risk of poverty or 
social exclusion stable.  

The recovery and resilience plans include a wide range of reforms and investments that 
will  contribute  to  strengthening  social  cohesion  and  resilience.  Measures  linked  to  this 
thematic focus in the plans already approved by the Council amount to approximately EUR 
135  billion,  around  30%  of  the  total  financial  allocations  of  these  approved  plans.  Those 
measures include, for instance, reforms and investments to make active labour market policies 
more  effective,  increase  the  capacity  of  public  employment  services  and  support  the  labour 
market  participation  of  women  and  disadvantaged  groups.  They  also  include  measures  to 
improve  access  to  quality  education  and  training  at  all  levels,  digital  education  including 
upskilling  and  reskilling  for  working-age  adults  to  ensure  that  they  can  thrive  in  a  fast-
changing  environment  and  fully  benefit  from  the  green  and  digital  transitions.  Finally,  the 
recovery and resilience plans also aim to enhance social resilience by investing in healthcare 
and  better  access  to  services,  including  early  childhood  education  and  care,  long-term  care 
and social housing. In this way, together with cohesion policy funds, the Facility is concretely 
supporting a fair and inclusive recovery in the EU. Timely and ambitious implementation of 
these  plans  will  translate  into  tangible  effects  for  the  European  citizens,  supporting  the 
ongoing transformation of the national economies in view of the twin transitions. In addition, 
the Just Transition Mechanism, including the EUR 19 billion of the Just Transition Fund, is 
expected  to  mobilise  some  EUR 55  billion  over  the  period  2021-2027  in  the  most  affected 
regions,  in  order  to  alleviate  the  socio-economic  impact  of  the  transition  towards  climate 
neutrality, thus contributing to its fairness. 

11 

 
2.4 Macroeconomic stability  

Further increasing the stability of its economy by addressing the remaining fragilities at 
national and EU level and closely coordinating relevant policies at EU level will ensure 
resilience against future shocks and help in facilitating the green and digital transitions. 
The strong and coordinated policy response to the COVID-19 crisis has significantly reduced 
its  economic  and  social  impact,  while  at  the  same  time  having  a  positive  impact  on 
macroeconomic  stability.  This  experience  highlights  the  relevance  of  continued  strong 
coordination  of  economic,  fiscal,  employment  and  social  policies,  covering  different  policy 
and  funding  tools  and  linking  the  EU  and  national  levels.  It  has  also  underscored  the 
importance of building  economic and social  resilience against unexpected shocks, including 
by creating in normal times fiscal room that can be deployed in downturns.  

Member  States  should  continue  to  provide  targeted  and  temporary  fiscal  support  in 
2022  while  safeguarding  fiscal  sustainability  in  the  medium  term.  The  general  escape 
clause of the Stability and Growth Pact allowed the Member States to support their economies 
in  the  midst  of  the  COVID-19  crisis.  It  is  expected  to  be  deactivated  as  of  2023.  When 
economic conditions allow, Member States should pursue a fiscal policy aimed at achieving 
prudent medium-term fiscal positions and ensuring fiscal sustainability in  the medium term. 
At the same time, Member States should enhance investment to achieve the twin transitions, 
to stimulate the economic activity and the  employment potential. The Commission opinions 
on the draft budgetary plans of the euro area Member States19 and the Commission proposal 
for  a  recommendation  on  the  economic  policy  of  the  euro  area20  are  part  of  this  Autumn 
package. 

A growth-friendly composition of public finances and fair and efficient taxation will be 
instrumental  to  enhance  investment  and  support  a  fair,  sustainable  and  inclusive 
recovery.  A  coordinated  and  sustained  effort  over  several  years  is  necessary  to  ensure  a 
persistent and sizeable increase in private and public investment proportionate to the needs of 
the  twin  transitions  and  economic,  social  and  territorial  cohesion.  While  the  Recovery  and 
Resilience Facility provides for substantial temporary support, national budgets also have to 
play their role in promoting investment.  In this respect, the Member States need to improve 
the  composition  and  quality  of  their  public  finances,  on  both  the  expenditure  and  revenue 
sides,  while  making  progress  with  green  budgeting.  On  the  revenue  side,  at  a  time  when 
national administrations are striving to deliver more with less and need to meet the costs of 
the  pandemic  fairly  and  without  harming  the  recovery,  increasing  tax  compliance  and 
pursuing a shift to environmental taxation is essential. Tax collection can be boosted and tax 
fraud,  avoidance  and  evasion  reduced  through  the  e-filing  of  taxes,  tax  simplification,  and 
increasing administrative cooperation across Member States. It will also be important to curb 
harmful tax competition and aggressive tax planning.21 The Commission is preparing several 

19  “Commission  Communication  on  the  2022  Draft  Budgetary  Plans:  an  overall  assessment”  and  Commission 
Opinions on the 2022 Draft Budgetary Plans submitted by euro area Member States. 
20 Report from the Commission to the European Parliament, the Council and the European Economic and Social 
Committee, Alert Mechanism Report 2022, COM(2021) 741 final. 
21  For  example,  the  VAT  gap  report  (CASE  et  al.,  2020)  estimate  that  the  VAT  gap  in  the  EU  was  EUR 140 
billion in 2018 and forecast it to increase to EUR 164 billion in 2020 notably due to the pandemic. 

12 

 
                                                           
legislative proposals22,23 to enhance tax transparency, address  tax avoidance and  step up  the 
fight against tax evasion. These include a proposal to tackle the misuse of shell companies for 
tax  purposes.  Moreover,  the  OECD/G20  agreement  on  reforming  global  taxation  should 
ensure that multinational enterprises pay a fair share of tax wherever they operate and pay a 
minimum  15%  effective  tax  rate  from  2023.  The  Commission  is  preparing  a  proposal  to 
swiftly transpose the international agreement on minimum effective taxation into EU law. 

Member States’ recovery and resilience plans contain a number of measures in the area 
of  budgetary  and  taxation  policy.  Member  States  have  included  in  their  recovery  and 
resilience  plans  spending  reviews  aiming  to  increase  the  quality  of  public  expenditure  and 
modifications  of  taxation  systems  to  favour  more  sustainable  and  fairer  economic  activity. 
Some  plans  also  put  forward  reforms  aimed  at  improving  the  long-term  sustainability  and 
adequacy  of  their  pension  systems.  Proposed  reforms  increasing  the  efficiency  of  tax 
administration  should  improve  tax  collection  and  reduce  compliance  costs,  for  business, 
individuals, as well as tax administrations. Measures addressing aggressive tax planning have 
also been included by some Member States in their recovery and resilience plans. 

The  Alert  Mechanism  Report  provides  the  Commission’s  analysis  of  the  evolution  of 
imbalances and emerging risks24. For 12 Member States, an in-depth review will assess 
whether they are affected by imbalances in need of policy action. As the recovery settles 
in,  ensuring  the  resilience  of  the  EU  economy  also  means  addressing  pre-crisis  imbalances 
and  emerging  risks.  Following  a  gradual  correction  of  imbalances  up  until  the  onset  of  the 
pandemic, the subsequent economic shock increased pre-existing vulnerabilities. This applies 
especially to high public and private debts, which have increased as a result of the shock and 
the  measures  taken  to  counter  it.  Public  debt  levels  are  set  to  remain  above  pre-pandemic 
levels  in  about  one  third of Member States and in the EU as a whole over the next  decade, 
including due to spending related to population ageing, along with spending to tackle climate 
change  and  its  already  tangible  impact.  The  financial  condition  of  companies  has  been 
weakened  in  some  sectors  by  the  necessary  borrowing  to  cover  sudden  revenue  losses  and 
liquidity  shortages,  while  temporary  moratoria  have  sheltered  firms  and  allowed  them  to 
weather  the  downturn.  The  increase  in  house  prices  in  some  Member  States  carry 
overvaluation  risks. The economic recovery will help  governments  and the private sector to 
reduce their debt ratios and mitigate financial vulnerabilities.  

Completing  the  Capital  Markets  Union  and  the  Banking  Union  would  strengthen  the 
funding  channels  to  the  economy  and  promote  the  private  sector’s  contribution  to  the 
investment efforts and increase economic and social resilience. The EU banking sector has 
resisted well the economic shock induced by the pandemic and is playing a crucial role in the 
ongoing economic recovery. However, it continues to face structural challenges in a context 
of low profitability and fragmentation. A robust Banking Union would place banks in a better 
position  to  support  the  growth  of  EU  economies  in  a  more  integrated  Single  Market,  while 
protecting  EU  taxpayers,  and  would  contribute  positively  to  macro-financial  stability  of  the 
euro area. In addition, well-functioning capital markets  are necessary to provide companies, 

22 COM(2020) 312 final, An action plan for fair and simple taxation supporting the recovery strategy 
23 COM(2021) 251 final, Business Taxation for the 21st Century. 
24 Report from the Commission to the European Parliament, the Council and the European Economic and Social 
Committee, Alert Mechanism Report 2022, COM(2021) 741 final. 

13 

 
                                                           
including  SMEs  and  startups,  with  complementary  funding  sources  to  help  them  strengthen 
their capital and innovation potential in the post-pandemic environment and accompany them 
in adjusting to a greener and more digital economy.  

Figure  2:  Contribution  of  recovery  and  resilience  plans  to  the  four  dimensions  of 
competitive sustainability   

Note: Preliminary analysis of the 22 recovery and resilience plans adopted by the Council (figures  are subject to possible 
revisions). Reforms and investments at sub-measure level were assigned to the four dimensions of competitive sustainability. 
The mapping is illustrative and does not fully reflect the interrelated nature of many measures.   

3.  The European Semester evolves 

The  European  Semester  resumes 
its  broad  economic  and  employment  policy 
coordination in 2022, while evolving in line with the implementation requirements of the 
Recovery and Resilience Facility. The implementation of the Facility makes it necessary to 
continue adapting the European Semester to take into account overlaps and ensure that joint 
efforts can focus on the delivery of high-quality and ambitious recovery and resilience plans. 
The  implementation  of  the  plans  will  drive  Member  States’  reform  and  investment  agendas 
for  the  years  to  come.  The  European  Semester,  with  its  broader  scope  and  multilateral 
surveillance,  will  complement  the  implementation  of  the  recovery  and  resilience  plans.  The 
two processes will be intrinsically linked and every effort will be made to avoid overlaps and 
make the best use of the existing synergies to avoid unnecessary administrative burden.  

The  Commission  will  publish  streamlined  country  reports  in  spring  2022.  The  reports 
will take stock of Member States’ implementation of the recovery and resilience plans, also 
building  on  the  Recovery  and  Resilience  scoreboard  that  will  be  established  by  December 
2021  and  the  reporting  on  social  expenditures  in  the  plans,  based  on  the  methodology 
currently  being  agreed  with  the  European  Parliament  and  the  Council.  Moreover,  they  will 
provide an overview of  the economic and social developments  and  challenges that Member 
States  are  facing,  as  well  as  a  forward  looking  analysis  of  their  resilience.  Finally,  the 

14 

 
 
 
overview will include an assessment of progress on the implementation of the European Pillar 
of Social Rights notably via the revised Social Scoreboard, and on achieving the EU headline 
targets  on  employment,  skills  and  poverty  reduction.  Based  on  this  analysis,  the  country 
reports will identify gaps vis-à-vis those challenges that are only partially or not addressed by 
the recovery and resilience plans. Where applicable, the reports will also include a summary 
of the findings of the in-depth reviews under the Macroeconomic Imbalance Procedure, which 
will take into account the impact of the COVID-19 crisis.  

The  Commission  also  intends  to  propose  to  the  Council  to  adopt  country-specific 
recommendations  (CSRs)  in  spring  2022.  They  will  cover  key  issues  identified  in  the 
country reports, and where relevant the in-depth reviews, for which policy action over several 
years  may  be  required.  In  doing  so,  the  CSRs  will  help  to  bring  forward  and  reinforce 
Member  States’  efforts  under  the  RRPs,  while  addressing  emerging  challenges,  in  order  to 
fast-forward  the  twin  transitions  and  build  up  resilience.  The  CSRs  will  also  include 
recommendations  on  the  budgetary  situation  of  the  Member  States  as  envisaged  under  the 
Stability  and  Growth  Pact.  The  country  reports,  the  in-depth  reviews  and  the  proposals  for 
CSRs will form part of the 2022 European Semester Spring package.  

The  Sustainable  Development  Goals  (SDGs)  will  be  further  integrated  into  the 
European Semester. The 2020 European Semester cycle initiated the work on the integration 
of the SDGs, as called for by President von der Leyen in her 2019 Political Guidelines. The 
2022 European Semester cycle will continue upon this path in order to provide a fully updated 
and  consistent  SDG  reporting  across  the  Member  States.  First,  the  yearly  SDG  monitoring 
report25 will now be part of the European Semester documents and will be published as part of 
the Spring package. Second, each European Semester country report will include a dedicated 
section  discussing  the  country’s  status,  compared  to  the  EU  average,  and  progress  in  each 
SDG area26. Third, a combination of these two elements and additional indicators that monitor 
Member  States’  performance  in  view  of  key  EU  policy  targets  (e.g.  European  Green  Deal, 
Digital  Decade)  will 
reports  and  underpin  country-specific 
recommendations.  The  resilience  dashboards27  may  also  inform  the  analysis  for  the  country 
reports. 

the  country 

inform 

The  Commission  will  make  every  effort  to  ensure  synergies  and  streamlined  reporting 
obligations  between  the  Recovery  and  Resilience  Facility  and  the  European  Semester. 
The  avoidance  of  unnecessary  administrative  burden  will  be  the  guiding  principle  in  the 
relationship  between  the  Commission  services  and  Member  States’  administrations.  The 
Commission will streamline Member States’ reporting obligations under both processes. For 
example, the national reform programmes, to be submitted in April, will also be used for the 
bi-annual  reporting  under  the  Recovery  and  Resilience  Facility.  The  reporting  under  the 
appropriate  IT  tools  will  serve  for  the  monitoring  of  progress  in  the  implementation  of  the 

25 Eurostat, “Sustainable development in the European Union, Monitoring report on progress towards the SDGs 
in an EU context”, June 2021 edition. 
26 The SDG country overviews compiled by Eurostat track Member States’ position and evolution towards the 
https:// 
the 
achievement 
https://ec.europa.eu/eurostat/cache/infographs/sdg-country-overview/ 
27 https://ec.europa.eu/info/resilience-dashboards. 

compared 

average, 

SDGs 

see: 

EU 

the 

of 

to 

15 

 
                                                           
recovery and resilience plans and the overall progress on achieving previous country-specific 
recommendations, so no additional paper reporting trail will be necessary.  

Constructive  dialogue  with  Member  States  will  be  at  the  core  of  the  relaunched 
European Semester, integrated with the dialogue on the implementation of the recovery 
and resilience plans. With the dialogue on the design of the recovery and resilience plans, the 
Commission and Member States strengthened and deepened their cooperation, which is set to 
continue  during  the  plans’  implementation  phase.  This  dialogue  will  take  place  in  the  least 
burdensome manner for national public administrations, making also use of virtual or written 
exchanges. To ensure synergies, these bilateral exchanges will be combined with the broader 
European  Semester  dialogue,  covering  all  relevant  topics,  including  those  not  addressed  by 
the  plans.  In  addition,  the  Commission  will  support  the  exchange  of  views  and  analyses 
between Member States, which is a central element of effective multilateral surveillance. 

The systematic involvement of social partners and other relevant stakeholders is key for 
the  success  of  the  economic  and  employment  policy  coordination  and  implementation. 
Their timely and meaningful involvement is key at all steps of the Semester cycle. During the 
pandemic,  social  partners  have  supported  the  design  and  implementation  of  emergency  and 
recovery  measures,  and  of  the  recovery  and  resilience  plans  in  many  Member  States. 
However, their consultation and involvement differed significantly across Member States. For 
the  implementation  of  the  plans,  it  is  important  that  Member  States  engage  actively  with 
social  partners  and  other  stakeholders  through  dedicated  regular  meetings.  These  exchanges 
will also be an opportunity to engage on the broader economic, employment and social policy 
coordination agenda and will help to commonly identify challenges, improve policy solutions 
and  contribute  to  a  successful  implementation  of  the  European  Semester  and  the  Recovery 
and Resilience Facility. 

The strengthened inter-institutional dialogue at European level, with both the European 
Parliament and the Council, will continue. A continuous exchange on social and economic 
developments in the European Union is ensured by the biannual Macroeconomic Dialogue at 
political and technical level between the Council, the Commission and representatives of the 
European social partners. This format has already been used to discuss the European Semester 
as  well  as  the  Recovery  and  Resilience  Facility.  The  implementation  phase  of  the  recovery 
and  resilience  plans  and  the  resumption  of  country  reports  are  a  welcome  opportunity  to 
provide the Macroeconomic Dialogue at both technical and political level with a new impetus. 
The Commission will  also  continue its  close dialogue with  the European  Parliament on key 
social  and  economic  developments,  including  in  the  context  of  the  European  Semester  and 
will  engage  with  the  European  Parliament  before  each  key  stage  of  the  European  Semester 
cycle. Specifically for the Recovery and Resilience Facility, the Commission will continue to 
contribute  to  the  Recovery  and  Resilience  Dialogues  with  the  Parliament  and  regular 
exchanges in a dedicated Parliament Working Group on the Facility. The Commission intends 
to continue this good practice and is committed to strengthening the democratic accountability 
of the Union's economic governance. 

Medium-term reflections on the way forward for the European Semester will take place 
over the coming months in the context of the debate on the economic governance review. 
Several reflections and stakeholder consultations are ongoing and interlink with the objectives 
and  role  of  the  European  Semester.  Taking  into  account  the  changed  circumstances  for 

16 

 
 
 
economic governance in the aftermath of the COVID-19 crisis, the Commission relaunched in 
October 2021 the public debate on the review of the EU economic governance framework28. 
The  review  seeks  to  improve  the  effectiveness  of  economic  surveillance  and  policy 
coordination  in  the  Union,  and  the  public  debate  should  help  to  achieve  a  broad-based 
consensus on the way forward. Moreover, the implementation of the recovery and resilience 
plans  will  bring  additional  experience  and  knowledge  on  the  complementarities  and 
interactions  between  the  European  Semester  and  the  Recovery  and  Resilience  Facility.  The 
2022 European Semester cycle will be an opportunity to discuss these outcomes with Member 
States  and  the  relevant  stakeholders  to  see  if  and  how  the  future  European  Semester  cycles 
and their deliverables could be improved.  

Figure 3: Illustration of the 2022 European Semester and Recovery and Resilience 
Facility integrated processes 

Legend:  ASGS:  Annual  Sustainable  Growth  Survey,  EAR:  Euro  Area  Recommendation,  JER:  Joint  Employment  Report,  AMR:  Alert 
Mechanism Report, DBP: Draft Budgetary Plans, EA: euro area, RRF: Recovery and Resilience Facility, SGP: Stability and Growth Pact. 

4.  Conclusion  

Bold  and  coordinated  action  at  EU  and  national  level  in  response  to  COVID-19  has 
made  it  possible  to  shift  the  gear  from  crisis  management  to  recovery.  The  ambitious 
policy agenda and funding put forward at EU and national level will help ensure a lasting and 
inclusive recovery, making Europe  achieve the twin transitions and become fairer and more 
resilient.  The  Recovery  and  Resilience  Facility,  embedded  in  the  European  Semester,  is  the 
key instrument for the years to come to deliver on this agenda and provide the necessary steer 
for  its  implementation  across  Member  States.  It  will  be  a  collective  responsibility  of  all 
decision-makers to transform this steer into action and to make the recovery a success for all 
EU citizens and to strengthen the foundations for the prosperity of the future generations.  

28  European  Commission,  “The  EU  economy  after  COVID-19:  implications  for  economic  governance”, 
COM(2021) 662 final, 19 October 2021. 

17 

 
 
 
                                                           
As  the  structural  change  required  by  the  twin  transitions  advances,  the  European 
Semester  will  remain  the  overall  EU  framework  for  the  coordination  of  economic, 
employment  and  social  policies,  continuing  to  help  identify  the  relevant  policy 
challenges,  set policy priorities,  provide policy guidance and ensure policy surveillance 
and monitoring. The Recovery  and Resilience Facility will be at the core of the process in 
the coming years, as it is fully rooted in the EU’s aim of achieving competitive sustainability. 
Recovery  and  resilience  plans  will  help  Member  States  to  deliver  on  a  substantial  set  of 
existing  country-specific  recommendations  in  the  coming  years.  At  the  same  time,  the 
European  Semester  will  continue  to  provide  the  analytical  underpinning  for  identifying 
relevant  emerging  economic,  employment  and  social  policy  challenges  including  those 
stemming from the new or increased EU policy ambitions (e.g. Fit for 55, Digital Decade) not 
already  being  addressed 
forward  country-specific 
recommendations  in  that  regard.  Both  processes  will  thus  remain  intrinsically  interlinked, 
while  the  synergies  will  be  used  to  the  fullest  extent  in  order  to  avoid  overlaps  and 
duplication, including in relation to reporting requirements.  

the  plans  and 

for  putting 

in 

Implementing  the  ambitious  reform  and  investment  agendas  included  in  the  recovery 
and resilience plans will be imperative in the years to come. The Commission calls upon 
the Member States to ensure full and timely implementation of the reforms and investments 
included in their plans and to step up the programming and implementation of cohesion policy 
funds. The Commission also calls upon the Member States to take the priorities identified in 
this  Annual  Sustainable  Growth  Survey  at  heart  when  pursuing  national  reforms  and 
investments.  Member  States  have  a  wide  set  of  EU  policy  and  funding  instruments  at  their 
disposal, and the Commission stands ready to support them where possible. 

18