The European Semester is a yearly cycle of economic policy coordination within the European Union. It is supposed to improve economic policy coordination within the union and ensure the implementation of the EU’s economic rules, such as those in the Stability and Growth Pact (SGP) and the Macroeconomic Imbalance Procedure (MIP). Each year, the European Semester ends with country-specific recommendations (CSRs) regarding budgetary and economic policies for each EU country not under financial assistance, as well as for the euro area as a whole.
Last year we calculated a European Semester reform implementation index, similar to the work of Servaas Deroose and Jörn Griesse. The index ranges between zero (no or limited progress on all recommendations) and one (full implementation of, or substantial progress on, all recommendations). The index is based on the European Commission’s qualitative assessment of the implementation of the CSRs.
We have updated our conclusions with the 2016 assessments of the 2015 CSRs. The figure below shows continued deterioration: while implementation of CSRs was modest at the inception of the European Semester in 2011, the implementation index has fallen steadily each year since then. The weak and deteriorating implementation is likely related to the fundamental problem of EU economic policy coordination, which we highlighted last year: national policymakers are accountable to their national parliaments and focus on national interests, which often differ widely across member states. It is therefore not all that surprising that economic policy coordination in the EU hardly works at all.