The European Commission fires the starting shot for the European Semester 2018 against the background of solid economic growth. Once again, the economic recommendations do not hold any big surprises. The Commission continues to recommend reducing debt and increasing investments by “structural reforms”. However, according to a wealth-oriented policy, the development of social systems and sustainable wage increases to boost domestic demand should be right at the top of the Commission’s list of priorities. In doing so, the recent economic upturn would benefit all people in the Union.
The European Semester represents an economic coordination process at EU level. The annual cycle starts with the Commission's Autumn Package and ends in July when the European Council publishes the country-specific recommendations on economic and budget policy. The most important documents of the Autumn Package presented this week, include the Annual Growth Report, the Alert Mechanism Report, the recommendations on the economic policy of the euro area as well as statements on the budget planning of the euro countries.
In the Annual Growth Report, the Commission presents its economic recommendations and appeals to the Member States to adopt these in the coming year. The Commission regards the current priorities for the European Semester 2018 as being investments to increase productivity and to achieve long-term growth. From its point of view, further structural reforms are required to constantly reduce the high levels of debt of the Member States. The Alert Mechanism Report aims at the analysis of broad economic developments in the EU and identifies Member States with high macroeconomic imbalances. Based on this Report, the Commission is carrying out detailed examinations. Hence, in 2018, twelve EU States (Austria is not among them) will be analysed in more detail and will be presented with the results within the scope of the country-specific recommendations. The recommendations on economic policy in the euro area in 2018 include a neutral fiscal course and the fight against aggressive tax planning, measures to promote sustainable and inclusive growth as well as the finalisation of the Banking and Capital Markets Union. The comments on budget planning by the euro countries 2018 are oriented towards the provisions of the Stability and Growth Pact. A novelty of the European Semester 2018 is the plan to include the principles of the European Pillar of Social Rights in the economic recommendations.
Austria is mentioned twice in the European Semester 2018. In respect of budget planning, in the Commission’s opinion, Austria is among those euro countries, which are at risk of not fulfilling the requirements of the Stability and Growth Pact for 2018. Hence, the Commission calls for budgetary discipline to achieve the budgetary targets for 2018. Even though with regard to macroeconomic imbalances, Austria is not subject of a detailed analysis, rising property prices are nevertheless regarded as being problematic for future development.
The economic coordination process of the European Semester was established against the background of the financial and economic crisis. From the AK’s point of view, the recommendations by the Commission, which not least include strict budgetary discipline and structural reforms, show a neoliberal list. The Growth Report 2018 by the European Trade Union Confederation shows the possibility of an alternative roadmap for economic recommendations in the Eurozone. What it demands, is a larger EU budget for investments as well as higher social and territorial cohesion, a sharp increase in wages and an improvement in the quality of work.
European Commission presents Economic Forecast 2017
In connection with the European Semester, the Forecast, presented by the Commission at the beginning of November on the economic development of the Union promises continued growth. The prognoses were even revised upwards and are now estimated at 2.3 % for 2017. The reason for this seems to be robust private consumption, the positive development of the global economy and the decreasing unemployment figures. However, in spite of this generally positive outlook, the Commission points towards areas, which remain behind expectations. Here, one must definitely mention the very slow increase of wages as well as the underutilisation in the labour market.
From the workers’ point of view, the current economic upturn has to be strengthened further. This may be achieved by strengthening domestic demand, by promoting economically weak regions of the EU and by creating new jobs. Apart from that, intensifying public investments is also a way to strengthen economic growth, as these often act as a catalyst for private investments.