COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN CENTRAL BANK, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF REGIONS AND THE EUROPEAN INVESTMENT BANK 2026 European Semester - Autumn Package Delivering on the Competitiveness Compass: pushing forward with reforms and investments
Date: 2025-11-25
Institutions: European Commission, Reform and Investment Task Force
Subjects: EU Member State, EU growth strategy, European Semester, competitiveness, economic forecasting, economic policy, economic reform, energy transition, green economy, macroeconomics

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   EUROPEAN COMMISSION  Strasbourg, 25.11.2025  COM(2025) 955 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN CENTRAL BANK, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, THE COMMITTEE OF REGIONS AND THE EUROPEAN INVESTMENT BANK 2026 European Semester - Autumn Package    Delivering on the Competitiveness Compass: pushing forward with reforms and investments       
 
 
2026 European Semester - Autumn package 
Delivering on the Competitiveness Compass: pushing forward with reforms and 

investments  

Boosting the EU’s competitiveness to secure sustainable prosperity remains the European 
Commission’s  main  priority.  Last  year’s  Draghi  report1  provided  a  clear  diagnosis  of  the 
structural challenges facing European competitiveness and proposed a new industrial strategy 
for  Europe.  The  Competitiveness  Compass2  built  on  this  foundation  to  define  strategic 
priorities  for  the  next  five  years,  around  three  priority  areas  —  closing  the  innovation  gap, 
decarbonising the economy, and reducing strategic dependencies and five horizontal enablers3. 
Since  then,  the  EU  has  engaged  a  number  of  broad-ranging  policy  initiatives  to  support 
competitiveness,  including  the  Clean  Industrial  Deal4,  the  Single  Market  Strategy5,  the  AI 
Continent Action Plan6, the Union of Skills7,the Savings and Investments Union8, or the Vision 
for Agriculture and Food9. Significant opportunities have also been introduced with the mid-
term review of Cohesion Policy10. 

The past months have only added to the sense of urgency with which the EU has to tackle 
its structural challenges, strategic vulnerabilities and dependencies, and protect its social 
model. Unless the EU boosts investment, productivity and innovation it will not keep pace in 
an  increasingly  challenging  geo-political  environment  and  will  not  be  able  to  secure  its 
(economic)  security  and  prosperity,  including  for  future  generations.  While  this  European 
Semester  Autumn  Package  shows  that  the  EU  can  build  on  a  robust  economic  and  labour 
market  performance  and  support  social  achievements,  we  must  enter  a  new  phase  of  work, 
where  the  Commission,  together  with  Member  States,  will  concentrate  decisively  on 
implementation to further reinforce its competitiveness and resilience, with a strong emphasis 
on delivering concrete results and driving meaningful change across the EU.  

Delivering on the priorities identified in the Competitiveness Compass requires urgent 
action at the EU, national and regional level. The European Semester continues to support 
the  EU’s  efforts  to  better  coordinate  economic  and  employment  policies.  It  also  ensures 
sustained convergence of the economic and social performance of Member States and regions, 
also via the long-term EU budget, as outlined in the Commission’s proposal for the Multiannual 
Financial  Framework  (MFF)11.  Guided  by  the  Competitiveness  Compass,  the  European 
Semester will continue to provide country-specific guidance to identify actions at national and 
sub-national level in an operational and transparent manner. This European Semester cycle will 
further  strengthen  the  analysis  in  various  areas  that  are  important  to  deliver  on  the 
Competitiveness Compass agenda and to promote upward social convergence, in line with the 
European Pillar of Social Rights. The Annual Single Market and Competitiveness Report, to 
be published in January, will report on the progress on the Competitiveness Compass. 

1 The Draghi report on EU competitiveness. 
2 A Competitiveness Compass for the EU, COM(2025) 30 final. 
3 Cutting red tape, removing barriers in the single market, enabling more efficient financing, promoting skills and quality 
jobs and ensuring better coordination 
4 Clean Industrial Deal - European Commission 
5 Single market strategy 
6 The AI Continent Action Plan | Shaping Europe’s digital future 
7 Union of skills - European Commission 
8 Savings and investments union - Finance - European Commission 
9 Vision for Agriculture and Food - Agriculture and rural development 
10 Inforegio - A modernised Cohesion policy: The mid-term review 
11 EU budget 2028-2034 

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The Commission has proposed to channel a significant part of funding under the next 
MFF through the  national  and regional  partnership plans  (NRPPs) and the European 
Competitiveness Fund (ECF). The plans would inter alia have to effectively address all, or a 
significant  subset  of  challenges  identified  in  the  context  of  the  European  Semester.  This 
concerns,  in  particular,  relevant  country-specific  recommendations.  The  2026  cycle  of  the 
European Semester will therefore serve as a bridge to the next MFF. 

Launching the 2026 European Semester – key priorities 

The EU economy has shown resilience but requires further action to boost sustainable 
and fair economic growth amid strong headwinds. By 2024, the EU’s real GDP per capita 
was  4.1%  higher  than  in  201912  and  most  Member  States  had  recouped  the  income  losses 
caused by the pandemic. EU employment has reached historic highs, with a 76.2% employment 
rate in the second quarter of 202513. Still, the conjunction of a tight labour market, persistent 
skill and labour shortages, and a high share of workers in low wage jobs in sectors with limited 
productivity, hinders growth and aggregate productivity. In the medium-term, the EU economy 
is expected to continue growing at a moderate pace, with GDP growth forecast to reach 1.4 % 
in 2025 and 2026 and increase further to 1.5 % in 2027 and employment is expected to continue 
expanding and to decelerate in 2027. Furthermore, the heightened security threat and increasing 
trade barriers, which already hamper potential growth, represent a risk to the growth outlook.  

Confronted  with  an  adverse  international  economic  environment,  demographic  trends 
and weak labour productivity growth, the EU must take decisive action to foster economic 
growth, bolster its economic security and support competitiveness. This includes ensuring 
a stable macroeconomic environment, further promoting research and innovation in line with 
the  EU’s  3%  R&D  investment  target  and  supporting  the  uptake  of  advanced  technologies, 
investing  in  climate  resilience,  environmental  sustainability  and  human  capital  including  in 
health. It is also crucial to further improve the functioning of labour markets, enhancing the 
flow  of  savings  to  productive  investment,  accelerating  decarbonisation  and  bringing  down 
energy  prices,  reducing  strategic  dependencies  on  third  countries,  strengthening  Europe’s 
industrial capacity, enhancing the business environment including the rule of law and reducing 
administrative burdens. It will be equally important to remove barriers to the single market, 
developing  transport  and  clean  energy  infrastructure,  boosting  the  digitalisation  of  our 
economy,  tackling  poverty,  ensuring  upward  social  convergence  and  boosting  affordable 
sustainable housing and improving the competitiveness of EU regions. 

Against this background, today’s Autumn Package launches the 2026 European Semester 
cycle. The package contains the Commission Recommendation for a Council recommendation 
on  the  economic  policy  of  the  euro  area,  the  Commission  recommendation  for  a  Council 
recommendation  on  human  capital  in  the  Union,  the  Alert  Mechanism  Report  under  the 
macroeconomic  imbalances  procedure,  the  Commission  proposal  for  a  Joint  Employment 
Report,  an  assessment  of  the  fiscal  situation  in  EU  Member  States,  and  the  autumn 
communication on post-programme surveillance assessments14. 

12 Based on Eurostat data -  [nama_10_pc] Gross domestic product (GDP) and main components per capita 
13 Eurostat - EU labour market - quarterly statistics - Statistics Explained - Eurostat 
14 Autumn 2025 Communication from the Commission on Post-Programme Surveillance Assessments 
C(2025)9069final. Twice per year, under post-programme surveillance, the Commission carries out assessments 
of euro-area Member States that have had a financial assistance programme. The objective is to assess the 
Member State’s economic, fiscal and financial situation to ensure that it maintains its capacity to service its 
debt. The Communication indicates that all five assessed Member States retain the capacity to service their debt. 

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The 2026 draft recommendation on the economic policy of the euro area calls on euro 
area Member States to act individually and collectively within the Eurogroup to boost 
productivity and strengthen economic security, while maintaining the sustainability of 
public finances. On fiscal policy, it recommends maintaining a neutral fiscal stance in 2026 
while allowing differentiation and temporary flexibility for defence spending, in line with the 
targets in the medium-term fiscal structural plans and the national escape clause15. Medium-
term  fiscal  strategies  should  safeguard  sustainability,  while  also  making  room  for  renewed 
spending  pressures,  notably  in  relation  to  defence  and  competitiveness.  Increased  defence 
spending should be accompanied by efforts to remove industrial and labour bottlenecks and to 
foster an integrated EU  market for defence  equipment. Member States should  complete the 
implementation of their recovery and resilience plans by August 2026, ensuring absorption of 
available EU funds, taking advantage of the opportunities introduced with the mid-term review 
of cohesion policy. To boost productivity, the recommendation calls for promoting upskilling 
and  reskilling,  for  strengthening  education  and  training  policies  as  well  as  for  reforms  to 
improve labour market participation and job quality. Further efforts are also needed to fight 
poverty, and to improvee access to affordable and sustainable housing. The recommendation 
also  urges  stronger  investment  in  research  and  innovation,  in  the  transition  towards  a 
decarbonised and digital economy and to reduce strategic dependencies. Member States should 
also  take  action  to  deepen  the  single  market  by  eliminating  internal  barriers,  reduce 
administrative  burden  and  simplifying  regulation,  and  advance  a  European  Savings  and 
Investments  Union  to  enable  a  more  efficient  channelling  of  private  capital  into  long-term 
growth.  Finally,  the  recommendation  calls  for  completing  the  work  on  the  digital  euro, 
strengthening  the  euro’s  international  role,  and  preserving  financial  stability  through  close 
monitoring of risks in the banking and non-bank sectors. 

The Commission proposes for the first time a Council recommendation on human capital 
in the Union, as announced in the Union of Skills16. It calls on Member States to urgently 
steer actions to address skills shortages, with a focus on strategic sectors for the EU economy. 
This  includes,  strengthening  basic  skills,  Vocational  Education  and  Training  and  higher 
education, in particular in some science, technology, engineering, and mathematics (STEM) 
fields  to  build  a  solid  foundation  for  higher  productivity,  competitiveness  and  digital 
sovereignty, including financial, digital and AI literacy. It recognises digital skills as part of 
the essential skill set for modern life and further calls on Member States to make better use of 
skills  intelligence,  reduce  barriers  to  entry  to  professions  and  ensure  faster  recognition  of 
qualifications in strategic sectors for EU and third country nationals. The Recommendation is 
based on an assessment of current labour shortages and future projections of skills gaps, taking 
into account currently available skills and the capacity of our education and training systems 
to cope with EU labour market needs.  

The Alert Mechanism Report identifies seven Member States for which in-depth reviews 
should be carried out to assess whether they are affected by imbalances. The report initiates 
the annual round of implementation of the macroeconomic imbalance procedure (MIP), which 
aims to detect, prevent and correct imbalances that are adversely affecting, or have the potential 
to adversely affect, the proper functioning of the economy of a Member State, or of the EU as 
a whole. Based on the economic reading of the MIP scoreboard, the report identifies Member 
States  that  may  be  affected  by  or  may  be  at  risk  of  being  affected  by  imbalances.  In-depth 
reviews will be prepared for these Member States next spring. This is the case for Greece, Italy, 

15 The Commission has proposed to activate the national escape clause as part of the ReArm Europe plan / 
Readiness 2030 proposed by the European Commission in March 2025 to boost defence spending in the EU. 
16  Communication  from  the  Commission  of  5 March 2025,  The  Union  of  Skills  (COM(2025)  90  final).  The 
proposed Treaty basis is Article 148 of the Treaty on the Functioning of the European Union. 

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Hungary,  Slovakia,  Romania,  the  Netherlands  and  Sweden  as  a  follow-up  to  imbalances  or 
excessive imbalances identified on 4 June 202517. 

The  Joint  Employment  Report  monitors  the  implementation  of  the  employment 
guidelines and of the European Pillar of Social Rights. The report provides an update on 
progress towards the 2030 EU headline and national targets on employment, skills and poverty 
reduction. It shows that the EU is well on track to reach the employment target of 78%. At the 
same  time,  the  increase  in  employment  is  expected  to  slow  down  while  unemployment  is 
stabilising. Still, significant regional disparities persist both between and within countries. The 
EU’s productivity gap vis-à-vis many advanced economies is an additional concern. Almost 
one in twelve workers experienced poverty risks in 2024. Labour shortages persist, in part due 
to  poor  working  conditions  in  some  sectors,  and  are  expected  to  increase  on  the  back  of 
demographic change and new skill needs. Substantial further efforts are needed to reach the 
targets of having 60% of adults participating in training every year and of reducing the number 
of people at risk of poverty and social exclusion by at least 15 million. The report also analyses 
potential risks to upward social convergence based on the Social Convergence Framework18. 
This shows that Member States have mostly converged upwards in labour market participation, 
though employment outcomes of certain population groups are still lagging behind, including 
young people, persons with disabilities, and Roma. In the areas of skills and education, as well 
as  in  the  social  domain,  risks  to  upward  convergence  persist  despite  slight  improvements. 
Without intensifying policy efforts, including by promoting quality jobs, investing in human 
capital, and relying on effective social dialogue, these developments may exacerbate existing 
challenges and hinder EU competitiveness.  

The Commission also presents its assessment of the fiscal situation of Member States. This 
assessment  consists  of:  (i)  a  Communication  analysing  fiscal  developments  in  all  Member 
States, and assessing whether the nine Member States currently subject to the excessive deficit 
procedure19  have  taken  effective  action  in  addressing  their  excessive  deficit  (ii)  the 
Commission opinions on the draft budgetary plans for 2026 of 17 euro-area Member States; 
and (iii) a report under Article 126(3) of the Treaty on the Functioning of the European Union 
on  compliance  with  the  deficit  and  debt  criteria.  The  Commission  will  re-assess  Member 
States’ fiscal situation, including the state of play of implementation of medium-term plans and 
the actions taken under the excessive deficit procedure, in spring 2026, based on the annual 
progress reports to be submitted by Member States by 30 April 2026. 

Way forward and orientations for the 2026 European Semester cycle 

The  European  Semester  remains  the  key  framework  for  coordinating  economic, 
employment and social policies across the EU. In spring 2026, the Commission will provide 
country-specific recommendations (CSRs) based on the challenges identified in  the country 
reports. The 2026 cycle will be the first to look beyond the Recovery and Resilience Facility’s 
operational period. The 2026 CSRs will build on the comprehensive set of CSRs addressed to 
Member States in 2025 and remain focused on the delivery of the priorities identified in the 
Competitiveness Compass. They will take into account progress with the implementation of 
the 2025 CSRs, in particular as part of the execution of the recovery and resilience plans, while 
also reflecting emerging challenges and needs. The analysis of priority areas that are essential 
to improve competitiveness, in line with the Competitiveness Compass, will be deepened and 
expanded  to  enable  more  actionable  recommendations.  The  country  reports  will  contain  a 

17 2025 European Semester: Spring Package Communication. 
18 In line with Regulation (EU) 2024/1263. 
19 Austria, Belgium, France, Malta, Italy, Romania, Hungary, Poland and Slovakia. 

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deeper  analysis  of  regional  competitiveness.  This  will  ensure  a  robust  foundation  for 
identifying reform and investment needs at national and regional level, also serving as a bridge 
to steer EU funding under the next MFF.  

The  Commission  will  deepen  the  dialogue  with  stakeholders  to  strengthen  public 
engagement  and  national  ownership.  The  Commission  will  base  its  analysis  and 
recommendations on an improved structured dialogue with governments,  regional and local 
authorities, social partners, and civil society organisations. These exchanges will take place at 
key stages of the process and focus on how Member States are addressing the 2025 CSRs, on 
identifying emerging  challenges  and on current  or future policy action to  address  identified 
challenges. Close cooperation with the European Parliament and the Council will continue to 
guarantee transparency, democratic accountability, and effective collaboration throughout the 
Semester cycle. 

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