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Erhvervsudvalget 2009-10
KOM (2010) 2020 Bilag 8
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ANNEX – GOVERNANCE, TOOLS AND POLICY CYCLE OF EUROPE 2020

In March 2010, the Commission proposed "Europe 2020: a European strategy for

smart, sustainable and inclusive growth"

. This Strategy is designed to enhance the

EU's growth potential and deliver high levels of employment, productivity and social

cohesion. Progress in achieving the objectives of the Strategy will be monitored by

theme and by Member State as part of a new economic policy co-ordination process

decided by the European Council. To track progress the Commission proposed five

headline targets for the EU. These will be translated into national targets by each

Member State, reflecting their different starting points and the diversity of situations

across the EU. Member States will pursue growth enhancing reforms in the key

Europe 2020 thematic policy areas – these national plans will be set out in National

Reform Programmes. Pursuing similar growth enhancing reforms at EU level, the

Commission is launching seven flagship initiatives in priority policy areas.

The European Council finalised the Europe 2020 Strategy at its June 2010 meeting.

It confirmed the five EU headline targets, gave its political endorsement to the

Integrated Guidelines for economic and employment policies and asked Member

States to implement the policy priorities of Europe 2020 at their level

. It invited the

Member States, in close dialogue with the Commission, to rapidly finalise their

national targets.

This paper provides more operational guidance for Member States on what will be

required from them at various points throughout the year in order to deliver on the

aims of Europe 2020. It also explains the role of the Commission throughout the year

in the new governance cycle. A key new element of the governance of the Europe

2020 Strategy is the introduction of a "European Semester" starting in January 2011.

Under this new process the instruments of the Stability and Growth Pact and the

Europe 2020 Strategy will be aligned, while retaining their legal specificities.

Therefore this operational guide also draws on and complements the recent

Commission Communications on reinforcing economic policy co-ordination

The aim of aligning the Stability and Growth Pact and the Europe 2020 Strategy is to

bring a stronger ex-ante dimension to economic coordination and surveillance in the

EU, allowing the EU to draw timely lessons from national developments and Member

States to fully incorporate the European perspective and guidance into their national

policies for the following year. This will also ensure greater consistency and

effectiveness in terms of policy direction and reporting at all levels.

OLICY COORDINATION UNDER THE

UROPE

2020

STRATEGY AND THE

SGP

Taking on board the lessons of the crisis, the implementation of the Europe 2020

Strategy will be based on a much stronger policy framework at EU level. This will be

done through reinforced, integrated surveillance to address key macro-economic

challenges combined with a thematic approach to speed up growth-enhancing

structural reforms.

COM(2010)2020 of 03.03.2010

See EU headline targets agreed by the June European Council at:

http://www.european-council.europa.eu/council-meetings/conclusions.aspx?lang=en

COM(2010)250 of 12.05.2010 and COM(2010)367of 30.06.2010

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A visual representation of the governance of the new Strategy is given in Graph 1.

The five EU headline targets and the Europe 2020 integrated guidelines will serve as a

policy framework for the production of National Reform Programmes (NRPs). The

Stability and Growth Pact will be the framework for the establishment of Stability and

Convergence Programmes (SCPs).

Graph 1.

Governance of the Europe 2020 Strategy

EUROPE 2020 FIVE HEADLINE TARGETS

Stability and

Growth Pact

Europe 2020 Integrated Guidelines

Macro-economic

surveillance

Thematic

coordination

Fiscal

surveillance

National level

National

Reform

Programmes

Stability and

Convergence

Programmes

EU level

Commission’s Annual Growth Survey

EU annual policy guidance and recommendations

EU flagship initiatives and levers

The governance of the Strategy will be based on three integrated strands:



Macro-economic surveillance

to ensure a stable macroeconomic environment

conducive to growth and employment creation, taking full account of spill-over

effects across Member States economies, particularly in the euro area. In

accordance with the Integrated Guidelines (numbers 1 to 3), it will cover macro-

economic and structural policies to address macroeconomic imbalances, macro-

financial vulnerabilities, and competitiveness issues which have a macro-

economic dimension.

Monitoring of growth-enhancing reforms (thematic coordination)

will focus on

structural reforms in the field of innovation and R&D, resource-efficiency,

business environment, employment, education and social inclusion, in accordance

with the Integrated Guidelines (numbers 4 to 10). The policies pursued in this

context should be designed to deliver smart, sustainable and inclusive growth and

employment creation at national and EU level and also focus on removing

obstacles to achieving the objectives set in the above Guidelines. Progress will be

monitored through the five Europe 2020 headline targets and the national targets

which underpin them.



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

In parallel,

fiscal surveillance under the Stability and Growth Pact

will be

enhanced to strengthen fiscal consolidation and foster sustainable public finances.

This will help ensure the overall consistency of EU policy advice by identifying

the fiscal constraints within which Member States' actions are to be developed.

Member States have direct responsibility for the policy initiatives to be undertaken

under the Europe 2020 Strategy. Their NRPs and the SCPs will be the cornerstones of

their action.

Through reinforced monitoring and guidance mechanisms, the EU level will provide a

supportive policy framework. The Commission will work to unlock new growth

potential and to remove obstacles to sustainable growth through seven flagship

initiatives and by mobilising the main EU policy instruments for growth and jobs, as

explained below.

Graph 2.

EU tools in support of the Europe 2020 Strategy

EU monitoring and guidance

Macro, thematic

& fiscal

surveillance

Annual

Growth

Survey

Annual

policy

guidance

EU flagship initiatives

Digital

Agenda

(May 2010)

Youth

on the Move

(Sept. 2010)

Innovation

Union

(Sept. 2010)

New

Industrial

Policy

(

Oct. 2010)

New Skills

and Jobs

(Nov. 2010)

Platform against

Poverty

(Nov. 2010)

Resource

Efficiency

(early 2011)

EU levers for growth and jobs

Single

market

relaunch

Trade and

external

policies

financial

support

EINFORCED INSTRUMENTS

Strengthening EU strategic guidance

The Spring meeting of the European Council will provide horizontal policy guidance

for the EU and the euro area as a whole (and possibly for groups of countries). It will

take stock of the overall macro-economic situation and of progress towards the five

EU headline targets. It may also consider progress under the flagship initiatives. It

will provide policy orientations covering fiscal, macro-economic and thematic

elements and will advise on linkages between them. Member States should take these

orientations into account when preparing their SCPs and NRPs which should be

submitted to the Commission in April of each year.

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Annual Growth Survey

The Commission's

Annual Growth Survey,

presented each January, will be the main

input for discussions at the Spring meeting of the European Council. The

Survey

will

include both a review and a forward-looking part integrating the three main strands of

surveillance:

The review will focus on:

– Fiscal and macro-economic developments in the EU and the euro area, including

macroeconomic imbalances (based on an alert mechanism developed by the

Commission), macro-financial risks as reported by the European Systemic Risk

Board (ESRB) and progress made with the implementation of policies to address

macro-structural challenges;

– Thematic developments in the EU, in particular overall progress achieved on the

EU headline targets, as well as progress on the flagship initiatives and in removing

bottlenecks in the single market and in the external aspects of the Strategy;

– Fiscal stance and overall progress towards fiscal targets.

– Horizontal issues related to developments in intra-euro-area imbalances and

competitiveness, to be discussed by the Eurogroup.

The forward-looking part will describe:

– The main challenges for fiscal and macro-economic policies taking into account

indicators of macro-financial vulnerability and competitiveness.

– Policies to address these challenges, also taking into account the views of the

ESRB.

– Priorities for action in the area of structural reforms to advance the thematic part of

the strategy.

– The Commission's draft Joint Employment Report will constitute a part of the

survey addressing employment policies.

The role of sectoral Councils

Input to the Spring European Council will be prepared as appropriate by the ECOFIN

Council (macro-economic surveillance) and by EPSCO as well as other Council

formations (thematic coordination), taking account of the key findings of the Joint

Employment Report. Comparisons with the performance and measures taken by

international partners will be included in the Annual Growth Survey and should also

be discussed in Council.

Throughout the year, the sectoral Councils will play a key role in examining progress

towards the EU headline targets, through appropriate monitoring and peer review, as

well as in advancing the Europe 2020 flagship initiatives.

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Effective reporting at Member States' level

Effective reporting will enable the EU to undertake effective monitoring, surveillance

and peer review of progress. Reporting will be carried out through the Stability and

Convergence Programmes (SCPs) and the National Reform Programmes (NRPs),

which will submitted simultaneously by mid-April:



The content of

Stability and Convergence Programmes

will be adapted to fit

the new cycle of the European Semester. SCPs will be submitted before

government adoption of national budgets for the following year and will

include the necessary information to allow for meaningful discussions on

fiscal policy. This is especially important for the year t+1.

National Reform Programmes

will play a key role under Europe 2020 and are

to be regarded as the counterpart of the SCPs. The Commission will propose

that NRPs be based on a Code of Conduct, similar to that for the SCPs. NRPs

should contain the elements necessary for country specific as well as for

thematic surveillance under the Europe 2020 strategy (see box below).



Both reports (NRPs and SCPs) should be fully integrated within the national

budgetary procedure. It is important to ensure involvement of regional/local

authorities, social partners and other stakeholders throughout the preparation process

to build broad-based support for the implementation of these policies.

Main elements of the NRPs

The NRPs should include the following building blocks:

- Macroeconomic scenario

A cross-reference to the elements in the SCP should be made here.

Macro-economic surveillance:

Drawing on the work of the EPC/EFC, the NRP should identify non-fiscal, macro-

economic policies in accordance with the Integrated Guidelines (notably 1 to 3) to

address internal/external imbalances, ensure macro-financial stability, and tackle

competitiveness weaknesses having a macro-economic dimension.

- Thematic coordination:

–

The NRP should set out Member States' proposed trajectories for meeting

their agreed national targets derived from the five EU headline targets and

should track progress towards these targets (Integrated Guidelines 4 to 10).

NRPs should include a description of key measures to achieve the national

targets, including time-tables and budgetary impacts.

–

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–

In addition, Member States should set out how they intend to tackle obstacles

to achieving the objectives set in the above guidelines with a focus on policy

outcomes and demonstrating concrete results.

The above guidelines provide a list of the measures which Member States

could consider to attain their agreed targets and to tackle bottlenecks. Where

appropriate, Member States should indicate how EU structural funds will be

used in support of measures to achieve the targets as well as the budgetary

impact of these measures. NRPs should clearly focus on a limited set of

priority measures, based on the principle that reforms must be sequenced.

–

- Participation, communication and identification of good practice

The NRP should indicate how the national authorities plan to involve/have involved

local/regional authorities and relevant stakeholders in defining and implementing the

NRP and how they communicate (or plan to communicate) on Europe 2020 and on

their own NRP, and what the results have been. They will also be invited to report on

their experience with collecting, sharing and implementing good practices.

Country-specific recommendations

In June of each year, the Commission will propose a single set of country-specific

recommendations and/or draft opinions attached to a single country report and an

overall report for the euro zone, to reflect the integrated nature of the Strategy.

However, these will be issued under separate legal instruments:

Council Opinions

on fiscal policies;

Recommendations

on other elements of macro-economic surveillance will be issued

under articles 121 of the Treaty and on the basis of secondary legislation currently

being prepared as regards excessive imbalances;

Recommendations

on thematic issues will be issued under articles 121 and 148 of

the Treaty.

The Commission will consider on a case-by-case basis whether it would be

appropriate to issue a recommendation for a longer period – for example two years –

in order to give sufficient time for implementing important structural reforms.

In cases where recommendations are not followed up sufficiently within the time-

frame provided, the Commission may issue policy warnings and ensure effective

enforcement through appropriate incentives and sanctions in the context of excessive

imbalances procedures.

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The Europe 2020 flagship initiatives and other EU instruments

Graph 2 above gives an indicative timeline for the launching of the seven Europe

2020 flagships. Active engagement of sectoral Councils and of key stakeholders will

be critical to their success. The Commission will mobilise key EU instruments – the

single market, trade and external policies, the EU budget – in support of the Strategy.

2011:

THE LAUNCH OF THE

UROPEAN

EMESTER

Under the new governance scheme, there will be one annual policy cycle for

economic policy coordination, in which the instruments of Europe 2020 and the SGP

will be synchronised and made fully coherent.

The organisation of the annual cycle reflects the agreement on the "European

Semester" reached by the June 17 European Council. Graph 3 highlights the main

building blocks of the "European Semester".

Graph 3. The European Semester of policy coordination

January

February

March

April

May

June

July

European

Commission

Annual

Growth

Survey

Policy guidance

including possible

recommendations

Autumn:

Peer review

at EU level

Council of

Ministers

Debate &

orientations

Finalisation

& adoption

of guidance

European

Parliament

Debate &

orientations

European

Council

Spring EU

summit

Adoption of National

Reform Programmes

(NRPs) & Stability

and Convergence

Programmes (SCPs)

Endorsement

of guidance

Member

States

Autumn:

Decisions

at national

level

The first full cycle according to this new approach will begin in 2011, as follows:

January-June each year:



January:

the Commission presents its Annual Growth Survey, reporting on

progress and setting out orientations for the coming year.



February/March:

meeting of the European Council gives guidance to Member

States and EU level



By mid-April,

Member States submit their

NRPs and SCPs,

taking account of

policy guidance addressed to them.

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

June,

based on Member States' NRPs and SCPs, the Commission will present

proposals for

country-specific Opinions and Recommendations

addressed to

Member States.



In June,

ECOFIN and/or ECOFIN in Eurogroup formation discusses/adopts the

opinions and policy recommendations on fiscal and other macro-economic

policies, with necessary input from sectoral Councils as regards the thematic

recommendations. The EPSCO Council will adopt policy recommendations under

art. 148. The European Council will provide orientations where necessary in line

with Treaty requirements.

Second half of the year:

In the second part of the year, Member States finalise national budgets and policy

measures taking into account the EU and country-specific guidance received. In its

Annual Growth Survey of the following year, the Commission assesses how Member

States have taken EU guidance into account.

2010:

TRANSITION TOWARDS THE EUROPEAN SEMESTER

The first full annual policy cycle under the new "European Semester" approach will

begin in 2011. Given the need to develop sustainable growth enhancing policies and

reforms and to ensure coordination at EU level, Member States are requested to start

identifying key structural reforms with large macro-economic impact, compatible

with a credible fiscal consolidation strategy, and reform priorities to promote smart,

sustainable and inclusive growth and jobs.

In developing their NRPs, Member States should take due account of the Europe 2020

Integrated Guidelines, which are expected to be adopted after the summer. In

operational terms, the Commission proposes the following process between now and

the finalisation of the first NRPs and SCPs by mid-April 2011:

–

Autumn 2010:

Member States should submit

draft NRPs

to the Commission

by 12 November.

This should be a blueprint, targeting only a limited number

of key elements, notably:

1. a medium-term macro-economic scenario,

2. the national targets translating the Europe 2020 headline targets,

3. an identification of the main obstacles to growth and jobs,

4. the main measures envisaged to "frontload" growth-enhancing

initiatives. It is understood that at this stage, the definition of measures

will be work in progress. Member States will not be requested to submit

draft NRPs in subsequent years.

By mid-April 2011,

full NRPs should be completed and finalised in line with

the more detailed guidance contained in the future Code of Conduct.

–

To assist Member States in their tasks and discuss the contents of the draft NRPs,

Commission services will take bilateral contact with Member States during September

and October 2010.