2016 European Semester: macroeconomic and fiscal guidance
to Member States
–ECOFIN Council conclusions on the Annual Growth Survey –
The Council (ECOFIN):

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THE 2016 EUROPEAN SEMESTER
1. WELCOMES the Commission's Annual Growth Survey 2016, which sets out broad policy
priorities for jobs and growth in the EU and its Member States, and marks the starting
point of the 2016 European semester.
2. BROADLY SHARES the Commission's analysis of the economic situation and policy
challenges in the EU. Despite a moderate recovery which is expected to accelerate
gradually, many economies face far-reaching structural policy challenges. Growth and
employment are constrained by persistent macroeconomic imbalances. A number of
economies have high long-term and youth unemployment, and slow productivity
growth is affecting competitiveness and living standards. High private and public debt
levels, together with the weak growth outlook, are holding back investment.
3. Within this context, STRESSES that policy should be directed towards consolidating the
recovery and tackling macroeconomic imbalances. The recovery partly reflects the
growing impact reforms implemented in the last few years are having and Member
States should continue implementing ambitious reforms and responsible fiscal policies.
UNDERLINES the importance of monitoring performance and policy implementation,
including the country specific recommendations and those for the euro area,
throughout the year. INVITES the Economic and Financial Committee and the Economic
Policy Committee to do so, based on input provided by the Commission and Member
States, and LOOKS FORWARD to discuss the implementation of country specific
recommendations in the relevant Council formations in the upcoming months.
4. AGREES on the broad policy priority areas outlined by the Commission on which
national and EU level efforts should concentrate in 2016: Re-launching investment,
pursuing structural reforms to modernise our economies, and responsible public
finances. RECOGNISES the stronger focus on employment and social performance.
5. The recovery, although expected to gradually accelerate, is strongly benefiting from
temporary positive factors including low oil prices, a weaker euro and very
accommodative monetary policies. At the same time, security concerns and geopolitical
tensions have intensified and the global economic outlook is becoming more
challenging so that downside risks to the economic outlook in the Union have
worsened. Within this context STRESSES that, in full respect of the role of all relevant

actors, economic policies need to further contribute towards delivering stronger and
sustainable growth.
6. WELCOMES the Commission's proposals to revamp the European Semester, set out in
its Economic Governance package of October 2015.

II FISCAL AND MACROECONOMIC POLICY ORIENTATIONS
Re-launching investment
7. ACKNOWLEDGES that in part as a result of the crisis, the level of investment has fallen
substantially. Despite overall favourable conditions of low interest rates, ample liquidity
in financial markets and progress in the deleveraging process, investment levels remain
low. STRESSES the urgent need to boost investment by improving the overall
investment climate to support the economic recovery, and to increase productivity and
growth potential.
8. WELCOMES the cooperation between the European Parliament, the Council and the
European Investment Bank to render operational the Investment Plan for Europe in less
than one year. WELCOMES the progress made on mobilising private and public
investment and RECOGNISES the importance of the selection of strategic projects with
high additionality under the European Fund for Strategic Investments (EFSI) to mobilise
additional private sector resources. CALLS for an enhanced national awareness about
the EFSI, and the development of private and public investment projects.
9. STRESSES the need to improve the regulatory environment at both national and
European level to lift the regulatory, administrative and other obstacles to private
investment and to exploit the benefits of regulatory predictability, the improvement and
diversification of sources of finances and the reinforcement of the level playing field in
the EU. UNDERLINES that attention should be paid to developing adequate
administrative capacity, as well as increasing transparency, efficiency, and accountability
in public procurement.
10. SHARES the Commission analysis on the need to improve the financing conditions for the
real economy and ACKNOWLEDGES the importance of rapidly advancing the work on
Banking Union to ensure financial stability. WELCOMES the Action Plan presented by the
Commission to build a Capital Markets Union and calls for all relevant actors to ensure its
rapid implementation.

III PURSUING STRUCTURAL REFORMS TO MODERNISE OUR ECONOMIES
11. WELCOMES Member States’ progress in modernising their economies and addressing
macroeconomic imbalances identified in previous years. HIGHLIGHTS that the
performance of Members States varies significantly in some areas crucial for productivity

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and convergence and LOOKS FORWARD to the Commission’s initiative to explore the use
of benchmarks and exchange of best practices across policy areas in order to encourage
convergence towards best performers and more resilient economic structures to achieve
stronger and sustainable productivity, employment and output growth. EMPHASISES that
thorough discussion on the appropriateness of benchmarks will be vital for their
effective use in the economic governance framework, and UNDERLINES the need to
ensure and safeguard national ownership for structural reforms as a key factor to
effective implementation, also on areas that are national competence.
12. ACKNOWLEDGES the role that EU funding and technical assistance can play in supporting
reform implementation. TAKES NOTE of the Commission’s intention to enhance the use
of European Structural and Investment Funds in this regard.
13. HIGHLIGHTS the need to focus on a number of key reforms in the labour market,
respecting the role of social partners, to help tackle youth and long-term unemployment;
faciliating the adjustment of real wages to appropriately reflect movements in
productivity over the medium term; modernising employment protection legislation and
promoting smooth labour market transitions; strengthening human capital formation;
and improving the effectiveness of social protection systems. ACKNOWLEDGES that a
comprehensive approach is required to integrate migrants and the recent influx of
refugees and facilitate their access to the labour market.
14. EMPHASISES that efforts should be stepped up to promote open and competitive
product and services markets, and also improve the functioning of the European single
market. RECOGNISES the potential of new technologies and business models as
additional sources of growth that can lead to significant job creation.

III. RESPONSIBLE FISCAL POLICIES
15. WELCOMES the progress with fiscal consolidation, but ACKNOWLEDGES that public
debt levels in most Member States remain high and there is still a need to secure longterm control over deficit and debt levels. EMPHASISES that Member States should
continue to implement their fiscal policies in line with the Stability and Growth Pact,
which allows the automatic stabilizers to work around the agreed path of structural
adjustment while making the best use of the flexibility in the existing rules of the SGP
and ensuring the long term sustainability of public finances. The fiscal effort should be
differentiated by individual Member States in full compliance with the requirements
under the SGP, while considering stabilisation needs, as well as taking into account
possible spillovers across the Member States, including for the euro area as a whole.
NOTES that the Commission assesses the fiscal stance for the EA and the EU as a whole
for 2015 and 2016 as broadly neutral and appropriate, balancing short term
stabilization and long term sustainability. WELCOMES that the Commission will take
into account the budgetary impact of the additional expenditure related to the

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extraordinary refugee crisis in line with the Stability and Growth Pact. STRESSES that
fiscal policies should be anchored in effective national governance frameworks to
enhance confidence, restore necessary fiscal buffers and avoid pro-cyclical fiscal
policies. UNDERLINES the need to maintain credibility and effectiveness in ensuring
fiscal responsibility. EMPHASISES that windfalls from the low interest rate environment
should primarily be used to reduce debt ratios or to compensate for the effect of
persisting exceptionally low inflation on the debt ratio, especially in those MS with high
government debt, but also possibly for investments or structural reforms, depending on
the country's fiscal position.
16. STRESSES that more attention should be paid to the quality and composition of fiscal
adjustment and the influence of fiscal policy on growth, by improving expenditure
efficiency and prioritising productive investment, including in human capital, in
government spending, shifting towards a taxation system that is more efficient and
supportive of growth, and to the need to address tax fraud and tax evasion and reduce
aggressive tax planning. WELCOMES the Action Plan presented by the Commission in
June 2015 aimed at re-establishing the link between taxation and the location of
economic activity and value creation.
17. ACKNOWLEDGES the demographic challenge and the need to respond through prudent
budget planning and responsible policies that ensure the sustainability of pension,
healthcare and long-term care systems. HIGHLIGHTS the role of the social partners or
other key stakeholders in line with national practice to ensure national ownership of
the reforms and EMPHASISES that social protection systems should be fiscally
sustainable.

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