Annual Growth Survey 2017

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Udvalgets udtalelse: Annual Growth Survey 2017

The European Economic and Social Committee (EESC) endorses the priorities set out in the European Commission’s 2017 AnnualGrowth Survey, i.e. the primacy given to fostering job creation and growth, through the three pillars of the AGS: pursuing structural reforms, ensuring responsible fiscal policies, and boosting investment. This annual survey provides a suitable basis for launching the European Semester process and, subsequently, drafting the ‘country-specific recommendations’.

The European Semester is seen as a good instrument for further progress in policies and reform, leading to recovery and employment. The AGS 2017 outlines the most pressing economic and social priorities, accompanied by specific recommendations, however the EESC takes very seriously the negative aspects of the rules of the Stability and Growth Pact and Country-Specific Recommendations applied at national level to set the euro area fiscal stance.

The AGS recognises many positive developments and signs of recovery in the EU. Investment has started to pick up, 8 million new jobs have been created since 2013, the employment target of 75 % is within reach, there are structural improvements in the performance of the labour market, and the average public deficit level has been reduced slightly in some Member States.

The Committee shares the view that preserving the European way of life is rooted in ensuring a promising economic future for all, but believes that further efforts are necessary to this end. The AGS openly says that the recovery is still fragile. Unemployment remains high, the risk of poverty has if anything increased, GDP and productivity growth rates are too low, and investment worryingly remains below pre-crisis levels. There are still significant imbalances and broader risks within the euro area and the EU in general.

The EESC also believes that globalisation and technological and demographic developments, in particular digitalisation, are important catalysts for change and that everyone should be able to capitalise on them. The principal measures must include investment in levers of growth: knowledge, innovation, education and ICT.

The Committee supports the goals of equality, equity and inclusion, and draws attention to the importance of reforms and coordinated policies.

At the same time, the EESC notes that integration must be strengthened if joint objectives are to be achieved and handicaps overcome. European governance that is responsible, based on cooperation and characterised by both discipline and flexibility provides a guarantee in this regard. The European Semester clearly shows that setting up high-level partnerships between Member States is an effective way to overcome the crisis.

The EESC welcomes, in principle, the missions set out in the 2017 growth survey, as well as the distribution of tasks between the Commission and the Member States. It repeats its proposal — made previously, in its analysis of the 2016 growth survey — to supplement the European Semester. As well as increasing investment, structural reforms and strengthening macroeconomic balance, the main objectives also include progress to be made in terms of ‘beyond GDP’ indicators (social, environmental and sustainability targets).

The EESC believes that only a comprehensive system of indicators — such as the current system, which is also able to factor in social and environmental ramifications — is truly able to show real economic growth on the basis of results (GDR — gross domestic result).

In the EESC’s view, a clear and comprehensible overview of the political and strategic positions for the near future and for the longer term is essential. It is important that the priorities of the Juncker Commission as well as the 2030 targets, based on the Europe 2020 strategy (and which also cover sustainable development), jointly determine development processes.

According to the European Commission’s latest forecasts (1), EU Member States’ economic development will fundamentally stay the same between 2016 and 2018 in comparison to 2015, and the principal source of growth will be consumption rather than investment. This outlook, which is related to low growth and investment, is inauspicious, all the more so given that the strengthening of domestic demand remains as important as ever when it comes to boosting investment.

The coordination of all instruments of social policy should also be strengthened, given the limits to the EU’s competences. A well-designed benchmark system, which will be proposed by the future European Pillar of Social Rights, could stimulate the reform process and ensure better coordination of social policies within the European Semester.

Analysing the consistency between traditional cohesion policy — currently undergoing a mid-term review — and its financing (ESI Funds) on the one hand, and the new investment instruments (EFSI) on the other hand, should be a focus of the Annual Growth Survey. Since this is one of the most dynamic forms of cooperation between the Union and the Member States, it is also important to ensure better coordination, including in terms of its implementation. The implementation of improvements should be coordinated.

The Stability and Growth Pact is one of the main pillars supporting the functioning of the European Semester. Sustainable, long-term economic, social and environmental development must be based on appropriate and coordinated fiscal policies at EU level and the transparent and predictable functioning of financial systems.

The EESC draws attention to the fact that the structural changes needed to achieve sustainable development require considerable funds which will only be available if budgetary resources are used more effectively and investment is significantly increased.

Although this new European fund, the EFSI, will enable resources in the productive and physical infrastructure sectors to be substantially increased, the fact that social and public investment levels continue to be well below what is needed is very problematic. Sufficient budgetary flexibility should therefore be ensured.

The EESC strongly recommends that investing in education, training, healthcare and other social systems should be the priority, especially in regions with lower than average development.

European governance must be characterised by both shared ownership and reasonable flexibility. On the one hand, the EESC is of the view that the mid-term revision of the Union’s budget, redefining the objectives, significantly increasing the proportion of own resources and revenue, and making implementation more effective and efficient could help to shape a system in which flexibility could also be seen as a way to cover the risks. On the other hand, improved market conditions and smart regulation can encourage the competitiveness of the European economy in a broad sense (including from an economic, social and environmental perspective).