What is the European Semester?
The European Semester is an annual exercise that coordinates the EU's economic and social policies. During the Semester, EU Member States align their budgetary and economic policies with the objectives and rules agreed upon at EU level.
By achieving stronger economic and social coordination, the European Semester aims to ensure sustainable economic growth, job creation, macroeconomic stability and sound public finances across the EU.
The Semester timetable follows a recurring cycle, starting in autumn with the presentation of economic and social priorities by the European Commission. It concludes in October of the subsequent year when EU Member States submit their draft budgetary plans. Following this, the cycle starts over again.
The European Semester framework
The European Semester was established in 2010, to address the need for stronger EU socio-economic governance and better coordination between national economic and fiscal policies. The 2008 financial crisis had revealed the need for such an exercise. As a response, EU Member States initiated a broad reform of EU policies which included:
- new tools to handle Member States facing financial distress, including the European Stability Mechanism
- stronger fiscal surveillance of national budgets through the reformed Stability and Growth Pact
- new instruments to prevent and correct risky macroeconomic developments with the Macroeconomic Imbalance Procedure
- stronger coordination of employment, social and growth policies; and
- the introduction of the European Semester, an annual planning cycle that synchronizes the timetables of various coordination procedures
The European Semester ensures that national economic, social and budgetary policies are analysed and assessed together, while previously these policies were handled separately. It follows a specific one-year cycle. During the first phase, EU Member States discuss their economic and budgetary plans and agree on key priorities. In the second part of the cycle, known as the 'national Semester', Member States are expected to align national policies, notably the national budgets for the subsequent year. The European Commission plays an important role in the European Semester by evaluating draft budgets submitted by Member States and providing guidance to them.
The first European Semester cycle began in January 2011 when the Commission published the annual growth survey and Joint Employment Report. More recent Semester cycles commence in November, with the 'national semester' lasting from June until October.
Compared to previous coordination frameworks, the European Semester allows for:
- more regular monitoring
- more coordinated action against common challenges
- swifter response in case of problems
- enhanced transparency among Member States
- greater involvement of the European Parliament and national legislatures, social partners and other relevant stakeholders at all levels.
The European Semester timeline
The Semester follows a clear timetable. In addition to the formal steps described below, the European Commission engages in regular dialogue with Member States and stakeholders throughout the year.
- NovemberEuropean Semester Autumn Package
The European Semester cycle begins in November when the European Commission presents the European Semester Autumn Package. This sets out general social and economic priorities and provides Member States with policy guidance for the period ahead.
The Autumn Package generally includes:
- The Annual Sustainable Growth Survey, setting out the general economic, employment and social policy priorities for the European Union over the next 12 to 18 months, as assessed by the European Commission;
- The Opinions on the Draft Budgetary Plans of euro area Member States providing the Commission's evaluation of how Member States' draft budgets for the upcoming year align with EU economic fiscal rules. It includes an overarching Communication;
- A proposal for a Council recommendation on the economic policy of the euro area, providing policy advice to euro area Member States on topics that affect the functioning of the euro area as a whole;
- An Alert Mechanism Report aims to detect, prevent and correct macroeconomic imbalances that hinder the proper functioning of Member States' economies, the Economic and Monetary Union or the Union as a whole;
- Post-programme surveillance reports that assess the repayment capacity of Member States that have benefited from financial assistance programmes;
- A proposal for a Joint Employment Report, which analyses key employment and social developments in the EU, along with policy responses by national governments.
- January-MarchCouncil adopts conclusions and guidance
The Autumn Package documents are sent to the European Parliament and the Council of the European Union.
Between January and February, the Council discusses and adopts conclusions on the Annual Sustainable Growth Survey and the Alert Mechanism Report. It also approves, possibly with amendments, the draft Council recommendation for the euro area. The recommendation is then submitted to the European Council.
In March, the Council adopts the Joint Employment Report with conclusions. The European Council endorses the draft Council recommendation on the economic policy of the euro area. On this basis, EU leaders provide common guidance for the medium-term fiscal structural plans due in April. Additionally, the Commission offers fiscal policy guidance to inform the preparation of these national plans.
The European Parliament also discusses the Annual Sustainable Growth Survey, with the possibility of publishing an own initiative report.
- AprilMember States submit their policy plans for evaluation
By the end of April, Member States submit their medium-term fiscal structural plans or the related annual progress reports to the Commission for evaluation. These documents outline a multi-year net expenditure path, aiming to reduce national debt or maintain it at prudent levels. The structural plans also detail the reforms and public investments that countries intend to adopt to enhance sustainability and growth, and addressing key challenges identified within the context of the European Semester.
Starting from 2024, the medium-term fiscal structural plans replaced the former national reform programmes and stability / convergence programmes as part of the economic governance review. The plans cover a period of at least four years, depending on the length of the national legislature.
During the development of the policy plans or progress reports, Member States are expected to take into account the guidance issued through the country-specific recommendations (cf. June-July), the Council recommendation on the economic policy of the euro area and additional fiscal policy guidance by the Commission (cf. January-March).
- MayEuropean Semester Spring Package
The Commission presents the European Semester Spring Package, which provides economic and fiscal guidance to Member States following the assessment of the medium-term fiscal structural plan or the related progress report.
The Spring Package generally includes:
- A Communication summarising the main elements of the Package;
- Country reports for all Member States taking stock of the respective economic and social situations;
- Country-specific recommendations for all Member States providing guidance on how to adequately respond to new and existing challenges and deliver on key policy objectives;
- Post-programme surveillance reports that assess the repayment capacity of Member States that have benefited from financial assistance programmes;
- A Proposal on guidelines for Employment Guidelines that presents common priorities for national employment policies.
- June-JulyCouncil discusses and adopts country-specific recommendations
In June, the Council discusses the proposed country-specific recommendations and agrees on a final version. During these discussions, Member States can provide comments on their respective medium-term fiscal structural plans. After receiving an endorsement from the European Council, the Council officially adopts the recommendations in July.
- August-OctoberPutting country-specific recommendations into practice
Member States are invited to implement the country-specific recommendations and incorporate them into the reform, public investment and national budgetary plans for the following year. Euro area member states share their draft budgets with the Commission by mid-October, ahead of the next Autumn Package. The Commission assesses the plans against the requirements of the Stability and Growth Pact, the agreed net expenditure path and the country-specific recommendations.
At the end of the year, Member States finalise their national budgets, taking into account the Commission's Opinions on the Draft budgetary plans from the new Autumn Package.
Following this, the European Semester concludes, and a new cycle begins.
