In line with the activities of the European Semester related to the analysis of the economic situation in the Union and the Eurozone, the Commission led by Ursula von der Leyen presented this week the Autumn Economic Policy Package. This is the tool whereby the EU gives its opinion on the Member States’ budgetary planning for 2021 and presents its recommendations.
The package, based on the economic forecasts for autumn 2020, is the second step in the European Semester 2021 cycle, where, in September, the Annual Sustainable Growth Strategy (ASGS) was presented with its key pillar being the now well-known Next Generation EU. Following on from the first step, the strategy reiterates the centrality of the Green Deal and the concept of competitive sustainability, confirming four priorities for the EU – environmental sustainability, productivity, equity and macro-economic stability.
Therefore, with the autumn package, the Commission presented its opinions on the Draft Budgetary Plans (DBPs) of the Eurozone countries, taking into account the high level of uncertainty already highlighted in previous weeks and the economic recession caused by the Covid-19 pandemic. This year, the opinions are quite different, also considering the recommendations of the European Council last July which were of a purely qualitative nature, in line with the activation of the general safeguard clause of the Stability and Growth Pact.
From the Commission’s analysis, overall, the budget planning documents are in line with the Council’s recommendations, despite the fact that the picture is more complex for those countries – including Belgium, France, Italy, Portugal and Spain – which already had a high public debt before the outbreak of the health crisis. They will be required to make a greater effort to ensure the sustainability of their budgets in the medium term.
As well as the opinions, the Commission has published a recommendation on the economic policy of the Eurozone, a kind of advice that this year also involves a series of policy orientations along with classic economic priorities to foster recovery. This is accompanied by a report on the alert mechanism, a tool to identify macro-economic imbalances in the reference area, where a critical situation emerges for those Member States (12, including Italy) that were already experiencing imbalances before February 2020.
Notwithstanding the far from positive situation, the Commission remains confident about developments in 2021. “Most measures included in euro area countries’ 2021 budgets rightly support economic activity. But a strong and balanced recovery depends on a swift entry into force of Next Generation EU” said the Economy Commissioner, Paolo Gentiloni. He went on to reiterate that “to rebuild confidence, relaunch investment, and push ahead with transformative reforms to preserve our planet, build fairer societies and make a success of digitalisation. So I call on EU governments to show a strong sense of responsibility to their own citizens and to all Europeans at this crucial moment. Let’s get this recovery plan over the line”