Debate: European Semester for economic policy coordination: annual sustainable growth survey  – European Semester for economic policy coordination: employment and social aspects in the annual sustainable growth strategy survey
Date: WEDNESDAY, 9 MARCH 2022
Speaker: Valdis Dombrovskis
Language: EN

There is no doubt that these dramatic events – including sanctions we are introducing against Russia and Russia’s counter-sanctions – will weigh on the European economy. We will see overall higher inflation, more pressure on energy and food prices, and market volatility. While uncertainty is very high, our current assessment is that growth will clearly be impacted. But this is a price worth paying for defending freedom and peace, and our economic fundamentals are strong.  The EU economy has regained all the ground lost during the COVID—19 crisis. Unemployment is at a record low. This is not least thanks to the unprecedented policies we have put in place: Next Generation EU and the Recovery and Resilience Facility (RRF). This very worrying situation once again shows the importance of Europe remaining united, strong and resilient, and of sticking to our policies, because they are working. Promoting economic and social resilience is vital to ensuring Europe’s stability and prosperity. I would like to congratulate the rapporteurs, Irene Tinagli and Helmut Geuking. Their report demonstrates the broad alignment of views for coordinated policies to support our inclusive green and digital future.  The European Semester remains our framework for coordinating the EU’s economic and employment policies. We have adapted it to take into account the implementation of the RRF. With its very large investments in energy efficiency, decarbonisation and renewables, as well as in the resilience of vital infrastructure, the RRF is a powerful tool to reduce our energy dependency and build Europe’s future stability. The 30% of expenditure committed so far to employment and social goals will help to mitigate the impact of the transition on the most vulnerable, and also strengthen our social resilience.  Since we are now going through exceptional uncertainty, we will use the European Semester to identify new challenges and to follow up on those not addressed under the recovery and resilience plans. On the fiscal side, Member States need to continue supporting their economies this year with targeted measures. As you know, the General Escape Clause remains activated. Last week, the European Commission provided preliminary fiscal guidance for 2023. Our current projections indicate that the general escape clause is due to be disactivated as of next year, but in view of the uncertainty, we will reassess this in the spring on the basis of our spring economic forecast.  Overall, fiscal support should remain broadly at the same level as this year – this means a broadly neutral fiscal stance – and the RFF will continue to provide substantial support. In turn, high-debt Member States should start to rebuild buffers in a growth—friendly way. To achieve this, budgetary atunement should be gradual, and all Member States should promote and protect public investment in their fiscal plans. This underscores the importance of improving the quality and composition of public finances. Honourable Members, these are exceptional times. We are living through a period of very high uncertainty. Our policies need to remain agile. We need to monitor developments very closely, see how different risks evolve, and adjust our policies as necessary.