Business not as usual.

This year’s Country Specific Recommendations (CSRs) within the framework of the European Semester are dominated by the COVID-19 crisis. Comparing the 2020 recommendations and their comprehensive explanations with those of recent years, it can be seen that the usual calls for sustainable public spending cuts have been replaced with a kind of rebuilding feeling that favours a massive expansion of social spending. For example, not a word is mentioned about old age pensions, which is usually combined with an emphatic appeal for a significant increase in the retirement age. 

The proposals drafted by the Commission on 20 May are a rich source for better understanding how each Member State is affected, the measures put in place (including social policy) and what the future holds. By their very nature, the proposals are just a snapshot. The recommendations that follow are very brief. Although they take into account the special circumstances of each individual country, they mostly follow the same lines. This is particularly clear from the first recommendation for every country, which calls for a strengthening of the healthcare system in addition to other standard measures to cope with COVID-19.

The analysis on which Germany’s recommendations are based refer to the Commission’s 2020 spring forecast. According to this, Germany’s general government balance is expected to amount to -7.0% of GDP in 2020 and -1.5% of GDP in 2021, assuming no change in policies. The general government debt ratio is projected to reach 75.6% of GDP in 2020 and 71.8% of GDP in 2021. However, all of this may drop significantly depending on further developments in the economic situation and how policies change.

The number of actual recommendations is extremely limited for Germany – two instead of four as in most other cases. What is striking is the call to improve digital public services across all levels. Apart from Germany, Poland is the only other country to have clearly received this recommendation.

The Country Specific Recommendations for Germany are available here.

An analysis by the European Parliament provides a good overview of all CSRs directed to the Member States. The analysis is available here.

Many of the CSRs include calls to strengthen unemployment benefits, including for non-standard workers, and in particular through short-time working schemes.

A lot will be expected of the European Semester, especially during the COVID-19 crisis. Under the Commission’s proposed Emergency Recovery Instrument, the lion’s share, namely €310 billion in grants and €250 billion in loans, is to be used for the newly created Recovery and Resilience Facility. This funding is intended to strengthen the economic and social resilience of the Member States most affected, thereby reducing disparities between Member States. It also aims to ensure that reforms and investments are in line with the green and digital transitions.

In addition, it should help Member States meet economic and social challenges, including those in the fields of social security, employment and health. The implementation will now take place within the framework of the European Semester and will significantly enhance it. The Member States are to submit National Recovery and Resilience Plans, which will then be evaluated by the Commission.