How does the European Semester work?
The Semester contains a clear timetable, according to which the member states receive EU-level advice ("guidance") and then submit their policy plans ("national reform programmes" and "stability or convergence programmes") to be assessed at the EU level.
After their evaluation, the member states are given individual recommendations ("country-specific recommendations") for their national budgetary and reform policies.
If necessary, they also receive recommendations to correct macroeconomic imbalances. The objective is that member states take into account recommendations when they define their next year's budget.
Preparatory phase: analysis of the situation and follow-up to the previous year
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November and December
The preparations for the European Semester start when the Commission publishes its Annual Growth Survey and Alert Mechanism Report already in November of the preceding year.
The Annual Growth Survey presents the Commission's view of EU policy priorities for the next year. The member states are invited to take them into account when designing their economic policies for the coming year.
The Alert Mechanism Report reviews macroeconomic developments in individual EU countries.
Based on the Report, the Commission may decide to conduct in-depth review of the situation in the countries where the risk of potential macroeconomic imbalances is deemed high.
Such reviews help to identify whether potential macro-economic imbalance exist, and if they exist, their exact nature and scope. They furthermore enable the Commission to suggest policy recommendations to the member states.
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1st phase: policy guidance at the EU level
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January and February
The Council of the European Union debates the Annual Growth Survey, formulates orientations and adopts conclusions.
As the Semester has implications for a range of policies, therefore the Council of the EU discusses it in its various configurations. For example, in the Employment, Social Policy, Health and Consumer Affairs Council, the Economic and Financial Affairs Council, etc..
The European Parliament also discusses the Annual Growth Survey and may publish an own initiative report. It issues an opinion on employment guidelines.
It is furthermore involved in the process through the Economic Dialogue. The European Parliament may invite the President of the Council, the Commission and, where appropriate, the President of European Council or the President of the Eurogroup to discuss issues related to the European Semester. Individual member states may also be offered the opportunity to participate in an exchange of views.
March
Based on the Annual Growth Survey and the Council of the EU analysis and conclusions, the European Council (the heads of state and government) provides policy orientations.
The member states are invited to take into account these orientations when preparing their national stability or convergence programmes and national reform programmes which outline their budgetary policies and policies promoting growth and competitiveness.
The Commission publishes in-depth reviews of macroeconomic imbalances which are conducted in those member states where the risk of such imbalances was perceived to be high.
Based on these reviews, the Commission may draft recommendations aimed at the countries concerned for the purpose of correcting the imbalances. This can be done at the same time as the in-depth review is released or later in the process, together with other country-specific recommendations.
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2nd phase: Country-specific objectives, policies and plans
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April
The member states submit their policy plans, preferably by 15 April and at the latest by the end of April:
- stability and convergence programmes outlining the member states' medium-term budgetary strategy and
- national reform programmes outlining member states' structural reform plans, focused on promoting growth and employment.
May
The European Commission evaluates national policy plans and presents draft country-specific recommendations.
June
The Council of the EU discusses the draft and agrees on final country-specific recommendations. They are then presented to the European Council for endorsement.
July
The Council of the EU adopts the country-specific recommendations, and the member states are invited to implement them.
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3rd phase: Implementation
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July
Countries take into account the recommendations in the process of national decision-making on thenext year's national budget which will enable them to carry out policies as envisaged.
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The cycle starts again towards the end of the year, when the Commission gives an overview of the economic situation in its Annual Growth Survey for the coming year.
The Commission already starts taking into account the progress achieved by individual countries in implementing the recommendations.
Member states that benefit from financial assistance that is coupled with an economic adjustment programmes are not required to submit stability programmes, and are not subject to a possible in-depth review on macroeconomic imbalances. The condition for receiving financial assistance is a diligent implementation of the adjustment programme, which already covers all these policy areas.