Nightman1965 - Fotolia

EP Conference on the European Semester

In the EU Parliament’s European Semester Conference, there were significant differences in assessments of economic growth in the EU. It is unclear how the European Pillar of Social Rights could offset economic imbalances.

GD/AD – 02/2017

During the conference, which was held in Brussels from 30 January to 1 February 2017, there was a great deal of “fundamental agreement”, mainly with regard to method, but there were also significant differences in assessing the situation in specific countries. On behalf of the Commission, Commissioner Valdis Dombrovskis (Vice-President responsible for the Euro and Social Dialogue) took stock of the situation in 2016 and emphasised the importance of cross-border EU growth and structural reforms that encourage productivity. These are necessary to attract investment and thus improve growth and income. Dombrovskis mentioned, with concern, the growing inequality in national economies. Attempts will be made to overcome this, as much as possible, within the framework of the European Pillar of Social Rights.  

His Commission colleague Pierre Moscovici, responsible for Economic and Financial Affairs, sees a slow recovery; however, with a lack of investment, there will be uneven development and only “moderate” average growth of 1.5%. Moscovici called for caution when evaluating the long-term effectiveness of the EU economic area. There is still uncertainty and significant imbalances between national economies. However, he stressed the importance of the Stability and Growth Pact, including its provisions for income-oriented expenditure policy for economically weak Member States.  

Swedish MEP Gunnar Hökmark (EPP), rapporteur on the European Semester, acknowledged attempts at growth, but stated these are too weak and too slow. Unemployment is too high. Investment and growth are being hindered by high debt and deficits. Hökmark highlighted the striking divergence in how the EU economies are developing. Taxes in the EU are on average 10 to 15 percent higher than in other economic areas and this is also problematic. However, a Greek parliamentarian pointed out the lack of commitment by the EU to reduce “social injustices”. This encourages euro scepticism.  

Even though it may be statistically helpful, average growth in the “EU” actually says very little about the economic situation in the individual Member States. Observers have pointed out that growth of 1.5% in the labour market is unlikely to help deliver improvements on a permanent basis. Meanwhile, debt is increasing in many Member States including countries such as Italy, whose size has meant that existing rescue mechanisms have failed to help them, and they have gone into a Greek-like tailspin. The chain reaction from continued over-indebtedness, declining or only slightly growing productivity, and failing to keep finance policy promises is a major threat which could even eliminate national social security systems and cause a breakdown in government investment in improving infrastructure. 

Undoubtedly, many people in Greece and other EU countries are experiencing extremely difficult times with enormous socio-economic challenges. However, this can hardly be overcome with a policy of inflationary and vague economic promises which lose sight of the goal of reducing debt or simply deny it exists.