Policy guidance: EU Commission publishes its European Semester spring package

1. What is included in this year’s European Semester Spring Package?

The 2024 European Semester Spring Package includes:

• A Communication on the main elements of the European Semester Spring Package;
• Country reports for 27 Member States;
• Country-specific recommendations for 27 Member States;
• Fiscal Statistical Tablesproviding background data relevant for the assessment of the Member States’ budgetary situations;
• AReport on compliancewith the deficit and debt criteria of the Treaty;
• Post-programme surveillance reports forIreland,Spain,Cyprus,Portugal, andGreece; and
• A proposal for a Council Decision on Employment guidelines for the Member States.

2. What are the key priorities for the European Semester in 2024?

In the face of the current geopolitical reality and complex economic and social challenges, the EU seeks to build a robust and future-proof economy that secures competitiveness and long-term prosperity for all Europeans. This requires an integrated approach across all policy areas to increase productivity, resilience, fairness and sustainable growth. The European Semester provides the policy coordination framework for that purpose, also embedding the implementation of NextGenerationEU, with the Recovery and Resilience Facility (RRF) at its core, and of the Cohesion Policy programmes. While implementation of national recovery and resilience plans (RRPs) is underway, risk of delays need to be addressed.  Member States should continue to focus on the full and timely implementation of the national plans until 2026 and Cohesion Policy programmes.

This year’s European Semester paysparticular attention to competitiveness. The Commission calls for ambitious action by Member States to address the challenges identified in the country reports at national and regional level. This includes strengthening competitiveness and resilience, by improving educational outcomes, supporting skills development, promoting research and innovation, facilitating access to finance and accelerating the green and digital transition.

3. What is the link between the European Semester Spring Package and the implementation of the Recovery and Resilience Facility (RRF)?

Since its inception, the RRF – at the heart of NextGenerationEU – has become thecentral tool to deliver the EU policy priorities under the European Semester. The recovery and resilience plans (RRPs) under the RRF drive Member States’ reform and investment agendas while the European Semester, with its broader scope and multilateral surveillance, guides and complements the implementation of the RRPs. Together, the European Semester and the RRF continue to provide a robust framework for effective policy coordination in view of the current challenges.

In this context, thecountry-specific recommendationsadopted in this European Semester Spring Package provide guidance to Member States to adequately respond to  those key challenges that are only partially or not addressed in Member States’ RRPs.

4. What is the link between the European Semester Spring Package and the new Economic Governance Framework?

The new fiscal surveillance process is embedded in the European Semester, which remains the central framework for economic and employment policy coordination.

In this Spring Package, the proposed country-specific recommendations call on Member States to submit their medium-term plans in a timely manner and contain a qualitative recommendation on the growth of net expenditure, differentiated according to the deficit and debt situation of a given Member State.

Going forward, all Member States are required to describe reforms and investments in their medium-term plans and explain how these measures address the socio-economic challenges identified in country-specific recommendations issued in the context of the European Semester. In addition, to benefit from a more gradual fiscal adjustment path, Member States can commit to implementing reforms and investments that comply with specific criteria, such as addressing country-specific recommendations and targeting the achievement of specific EU policy priorities.

The European Semester will remain the key channel for the Commission and the Council to monitor Member States’ economic and fiscal policies. In Spring, Member States will provide Annual Progress Reports that will include fiscal reporting and take stock of the implementation of reforms and investments covered by the medium-term plans. In future autumn packages, the Commission will assess compliance of the Draft Budgetary Plans of euro area Member States with the agreed multiannual net primary expenditure path and will continue to make an overall assessment of the budgetary situation and prospects for the euro area as a whole.

5. What is recommended in the European Semester to help Member States strengthen their competitiveness and that of the EU?

The Spring Package calls on Member States to take policy action to promote competitiveness and increase productivity. To this end, the CSRs specifically target  improving thebusinessenvironment, improvingeducational outcomes,supportingskills development,promotingresearch and innovation, facilitatingaccess to financeand accelerating thegreen and digital transition,

• Ensuring abusiness environment supportive to competitiveness, taking full advantage of the opportunities generated by the single market, especially for SMEs.
• Improving educational outcomes and skills development: Member States should provide access to high-quality and inclusive education and training, with qualified teachers and modernised curricula. Addressing labour and skills shortages is essential to ensure the EU’s prosperity and social progress.
• Improving access to finance:The EU’s economic performance is hindered by risky and innovative activities having limited access to financing. Member States should implement reforms to improve savings allocation and capital financing, and to facilitate capital market and alternative forms of financing, especially for SMEs
• Improving research and innovation(R&I)and thebusiness environment: A favourable taxation and business environment are among the key elements that must be in place to foster R&I investments by the private sector. Member States should implement ambitious reforms to build integrated research and innovation ecosystems, focusing on governance, public research systems, science-business collaboration and knowledge transfers.
• Supporting thedigital transition:Securing the digital transition is crucial to building a competitive modern economy.Greater public investment in digital infrastructure and skills is needed and regulatory barriers should be tackled.
• Further accelerating thegreen transition:Increasing the autonomy, resilience and competitiveness of the EU’s net-zero industry is crucial for the green transition and EU competitiveness. In this context it is also important that Member States address labour and skills shortages, to better meet labour market needs, in particular with regards to the green (and digital) transitions.

6. Is the implementation of the national recovery and resilience plans on track?

The implementation of the national plans is continuing across Member States. The Commission has so far processed 46 payment requests under the RRF and has disbursed a total of over €240 billion to date for the successful implementation of reforms and investments by the Member States.

While overall implementation is moving ahead, some Member States are facing challenges, for instance due to limited administrative capacity or investment bottlenecks and are invited to urgently take measures to ensure the swift implementation of their recovery and resilience plans.

Detailed and up-to-date information on the state of play of the RRF in each Member State, as well as overall information on the Facility are available on theRRF websiteand on theRecovery and Resilience Scoreboard.

7. What is the link between the European Semester and the mid-term review of Cohesion Policy?

As defined in the Cohesion Policy legislation, this Semester cycle provides guidance on the key priorities in view of the upcoming mid-term review of the Cohesion Policy programmes. It includes a call to make use of the opportunities provided by the Strategic Technologies for Europe Platform (STEP) initiative to support the development of manufacturing capacities in critical technologies.

Cohesion Policy funds, in synergy with the RRF, are key to deliver on the Union’s political priorities, including the green and digital transition, and will continue to help regions achieve a balanced and sustainable long-term growth. Cohesion Policy funds account for a third of the European Union’s budget under the 2021-2027 MFF, amounting to €378 billion in EU funding. The majority of Cohesion Policy programmes were approved in 2022 and they will be implemented until 2029, with a mid-term review of the programmes planned in 2025.

The 2024 country-specific recommendations are one of the elements to be considered in the mid-term review of the Cohesion Policy programmes together with the progress of the implementation of National Energy and Climate Plans, the European Pillar of Social Rights, the socioeconomic situation of the Member State and its regions, progress in implementation, as well as existing evaluation results.

This year’s Spring package includes a comprehensive analysis of regional disparities across the EU as well as the investment and reforms needs ahead. In this context, the mid-term review of the Cohesion Policy programmes will be an opportunity to ensure that the future of the Policy will better target and address the challenges which have become more pressing and prominent over recent years.

The 2024 country-specific recommendations also encourage and invite Member States to consider the opportunities provided by the Strategic Technologies for Europe Platform (STEP) initiative as they prepare for the mid-term review.

8. How are EU funds working together in helping Member States tackle the challenges identified in the European Semester?

Together the RRF, Cohesion Policy and other EU funds ensure a comprehensive and coherent approach to challenges faced by EU Member States and their regions, while also pursuing EU policy objectives. The country reports outline how these funding sources are used in a complementary manner, tackling major challenges such as the twin green and digital transition.

The ongoing implementation of the RRF, including the introduction of dedicated REPowerEU chapters in national RRPs, the Technical Support Instrument, and the use of Cohesion Policy funds, continue to play a pivotal role in shaping reform and investment agendas in all Member States. As set out in the Annual Sustainable Growth Survey, the 2024 cycle of the European Semester explores complementarities and synergies between different EU funding instruments and Member States’ reform and investment actions and takes stock of the ongoing implementation of RRPs and Cohesion Policy programmes.

The RRF has disbursed over €240 billion to Member States in grants and loans so far, representing 36% of the total funds available. Also, over €256 billion has been disbursed under the Cohesion Policy funds since the beginning of the COVID-19 pandemic.

As illustrated in this year’s country reports, these instruments have supported the EU’s recovery towards a greener, more digital, fairer and more resilient future through job creation, improved competitiveness, macroeconomic stability and territorial and social cohesion.

9. How do the European Semester and the recovery and resilience plans support the implementation of the European Pillar of Social Rights and meeting 2030 targets for employment, skills and poverty reduction?

Through the European Semester, the Commission monitors progress on the implementation of theEuropean Pillar of Social Rightsand the2030 EU headline targetson employment, skills, and poverty reduction, as well as on the contributing national targets. The state of play is presented notably in theJoint Employment Report  as part of the Autumn European Semester package, as well as in the specific country reports. This is underpinned by the Social Scoreboard and its indicators across the areas of 1) equal opportunities and access to the labour market, 2) fair working conditions and 3) social protection and inclusion. In addition, this year the Commission has carried out a two-stage analysis of employment, skills and social challenges across Member States, based on the principles of a Social Convergence Framework outlined by the EPSCO Council.

The Recovery and Resilience Facility represents a unique opportunity to support investments and reforms that contribute to the implementation of the European Pillar of Social Rights and the achievement of the EU headline targets. Of the plans’ allocation, over 25%, or around €163 billion, is dedicated to social expenditure. This comes on top of national and EU financing through the Cohesion Policy funding, notably theEuropean Social Fund Plus, which provides for the period 2021-2027 almost €95.8 billion from the EU budget to invest in people. The implementation of the Cohesion Policy programmes and the RRPs until 2026 will contribute substantially to improving the EU’s competitiveness and boosting EU cohesion.

10. What has the Recovery and Resilience Facility achieved in the first three years since its inception?

The implementation of the RRPs continues to move ahead. Thanks to its unique design, the RRF swiftly provided significant financial support to Member States to address their economic and social challenges in the aftermath of the COVID-19 crisis, fast-forwarding the twin green and digital transitions, and strengthening their resilience for future challenges.

Member States are delivering on the reform and investment agendas included in their plans. By the end of 2023, more than 1,150 milestones and targets had been assessed by the Commission as satisfactorily fulfilled. The achievement of these steps in the implementation of the reforms and investments has led to positive change and tangible results on the ground. With the help of the RRF, for instance, over 28 million megawatt hours (MWh) in energy consumption have been saved. Over 5.6 million additional households now have internet access via very high-capacity networks, and almost 9 million people have benefitted from protection measures against climate-related disasters, such as floods and wildfires. To date, over €240 billion in RRF funds has already been disbursed to Member States.

The full assessment and detailed progress of the RRF of the last three years can be found on theMid-term evaluation of the Recovery and Resilience Facility (RRF) websiteand theRecovery and Resilience Scoreboard.

11. What are the main findings of the country reports?

The country reports suggest policy action needed at Member State level to overcome long-term economic and social challenges, with a particular focus on increasing competitiveness and productivity. They identify challenges that are not addressed, or only partially addressed, by each Member State’s RRPs, as well as any emerging challenges. They also closely examine progress on the implementation of RRPs, providing examples of milestones and targets reached, while highlighting cases where implementation risks and delays should be addressed.

The reports present a thorough analysis of the countries’ competitiveness challenges, including in terms of productivity growth, investment dynamics and labour and skill shortages.

They include an assessment of progress on the implementation of the European Pillar of Social Rights, via the Social Scoreboard, and on achieving the 2030 EU headline and national targets on employment, skills and poverty reduction, as well as the Sustainable Development Goals.

They also provide an updated and more detailed analysis on energy security and affordability as well as on Member States progresses on the energy transition including their draft updated National and Energy Climate Plans.

12. What are the main themes in the country-specific recommendations addressed to Member States?

The 2024 country-specific recommendations focus on:

• Ensuring a prudent fiscal policy in 2024-2025:Member States should submit a fiscal plan in line with the requirements of the new legislation by 20 September, unless it is agreed to extend the deadline by a reasonable period. Additionally, Member States are recommended to improve fiscal sustainability through structural reforms such as by implementing a spending review or tax and benefit reforms.
• Emphasising the importance of swift implementation of recovery and resilience plans and Cohesion Policy funds: The recommendations call on Member States to continue, or to accelerate implementation to ensure completion of reforms and investments by August 2026.  Country-specific recommendations also call for an acceleration of the implementation of the Cohesion Policy programmes, which also requires speeding up in some Member States. In some Member States, this requires the strengthening of administrative capacity and tackling implementation challenges.  Country-specific recommendations also highlight challenges which Member States should take into account when assessing their Cohesion Policy programmes, at the latest by 31 March 2025, in the context of the mid-term review. The country-specific recommendations also invite Member States to consider the opportunities provided by the recently adopted Strategic Technologies for Europe Platform (STEP) initiative to improve competitiveness in the context of the mid-term review.
• Tackling key competitiveness challenges:Member States should act on a wide range of policy issues affecting productivity and competitiveness, notably with regards to educational outcomes, skills and training, labour market policies, business environment, education, research and innovation and resource efficiency.

13. In which areas is the implementation of country-specific recommendations particularly lagging behind? What will the Commission do to improve this?

The 2024 cycle of the European Semester takes stock of Member States’ policy action to address structural challenges identified in the country-specific recommendations (CSRs) adopted since 2019. Following the establishment of the RRF, which is a key tool to deliver EU and national policy priorities, this assessment takes into account the policy action taken by Member States in the context of their recovery and resilience plans.

Progress in the implementation of CSRs adopted in 2023 has been substantial. Member States have made at least some progress in implementing almost 59% of the recommendations addressed to them in July 2023. From a multiannual perspective, at least some progress has been achieved for 71% of the 2019-2022 CSRs. In particular, significant further progress has been achieved on the 2019 and 2020 CSRs, which were the initial relevant CSRs addressed by the RRF. The percentage of these CSRs having recorded at least some progress of implementation has steadily increased to 75% now, up from 68% in 2023.

Still, reform implementation differs across policy areas.In recent years, Member States have made most progress on access to finance and financial services, anti-money laundering, labour market functioning and budgetary framework and fiscal governance. On the other hand, progress has been particularly slow on taxation policy, tax administration, tax evasion and tax avoidance, non-discrimination and equal opportunities, pension systems, and housing.

Altogether the RRF, as a performance-based instrument, has accelerated policy action to implement CSRs across policy areas, and it is expected to further reinforce implementation in the years to come as additional reforms and investments in the RRPs are undertaken.

Detailed information on the 2024 assessment of CSR implementation is included in an appendix of the Chapeau Communication and in the Country Reports.

14. What fiscal guidance is the Commission providing to Member States for the period ahead?

The fiscal recommendations that we propose this year as part of the Spring Package call on each Member State to submit its medium-term plan in a timely manner and recommends that the growth in net expenditure in 2025 is consistent with the fiscal adjustment required under the new economic governance framework.

By 20 September, each Member State is to submit its medium-term plan, in which it will commit to the growth ceiling of net expenditure for the next four years, to ensure debt sustainability. The Commission will present a consistent Autumn Semester Package, including the draft recommendations endorsing the medium-term plans, the opinions on the 2025 draft budgetary plans for euro area Member States and, for the Member States where an excessive deficit is identified, the draft Excessive Deficit Procedure recommendations.

For each Member State, once the medium-term plan is assessed and endorsed, the net expenditure path set by the Council in a recommendation will constitute the single operational reference for fiscal surveillance during the implementation phase.

15. Does the Commission have any concerns regarding Member States’ fiscal sustainability?

In spring 2024, the Commission updated its assessment of fiscal sustainability challenges in EU countries in the short, medium and long term. The update is based on the 2024 Spring Economic Forecast and reflects the agreed long-term economic and budgetary projections of the Ageing Report 2024, jointly prepared by the European Commission and the European Policy Centre.

The assessment finds that fiscal sustainability challenges are low in all EU Member States in the short term, while being elevated in the medium and long term in several countries, due to projected high and/or increasing debt ratios in some Member States at unchanged policies, and sensitivity to shocks. Adverse debt dynamics are explained in several cases by the economic and budgetary impact of population ageing, as well as the less supportive interest – growth rate differential conditions expected in the future.

16. Following today’s report, what are the next steps in the opening of Excessive Deficit Procedures?

The excessive deficit procedure (EDP) follows a step-by-step procedure that is outlined in detail under Art. 126 of the Treaty on the Functioning of the European Union.

As part of the Spring Package, a report under Article 126(3) has been adopted. Now the Economic and Financial Committee has two weeks to formulate its opinion. In July, the Commission intends to formulate opinions addressed to the Member States in which excessive deficits exist. At the same time, the Commission intends to propose to the Council decisions establishing the existence of an excessive deficit.  The next step in the procedure consists in  the Commission proposal for  Council recommendations to the Member States concerned to put an end to the excessive deficit situation. They should include the deadlines to take effective action and to correct the excessive deficit, and a corrective path that ensures that the deficit was brought and maintained below the reference value within that deadline.

The Commission intends to propose such recommendations together with its Opinions on the Draft Budgetary Plans. This would ensure consistency  between the budgetary requirements under the excessive deficit procedure and the adjustment path set out in the medium-term fiscal-structural plans, as part of a coherent package that would include the recommendations endorsing the medium-term plans, the EDP recommendations for Member States where an excessive deficit was identified and the opinions on the 2025 draft budgetary plans for euro area Member States.

17. How does the Commission assess the recent evolution of macroeconomic imbalances?

The main conclusions of the in-depth reviews for Cyprus, Germany, Greece, Hungary, Italy, the Netherlands, Romania, Slovakia, Spain, and Sweden on possible macroeconomic imbalances are as follows:

• • Current accounts improved in 2023, with marked reductions in energy prices. However, concerns about some large current account deficits and surpluses remain.
  • House prices have moderated or even fallen in several Member States, but underlying issues, including housing undersupply, have not been resolved.
  • Cost competitiveness developments are easing. However, divergent price and cost dynamics are still an issue in some countries.
  • Large public, private and external debts have continued their downward trend with strong reductions last year on the back of marked nominal GDP growth and weak credit flows.
  • Still tight financing conditions may result in risks for borrowers and lenders, in particular, where re-financing needs are large.
  • The banking sector has withstood the recent macroeconomic developments well, and non-performing loans have continued to fall recently but often only marginally.

18. What is included in the proposal on guidelines for employment policies?

The Commission is proposingguidelines for Member States’ employment policies in 2024. These guidelines setcommon prioritiesfor national employment and social policies to make them fairer and more inclusive.

The 2024 annual update of the 2023 guidelines adds more elements related to skills and labour shortages, also related to the dedicated Action Plan put forward by the Commission, as well as references to new technologies, artificial intelligence and algorithmic management and their impact on the world of work. It also touches on recent policy initiatives of particular relevance such as platform work and affordable housing.

Moreover, the Employment Guidelines are updated to include references to the 2030 national targets on employment, skills and poverty reduction, alongside the already existing 2030 headline targets at EU level. Other targeted adjustments include:

• References to legal migration, in full complementarity to harnessing talent from within the EU, including in relation to the recognition of skills of third country nationals, and in light of the EU Talent Pool;
• References to improving educational outcomes among young students, following the recent declines experienced on basic skills levels, including among top performers;
• References to addressing gaps in access to social protection for the self-employed and for workers in non-standard forms of employment, in light of the Council Conclusions on social protection for the self-employed.

Following the adoption of the Spring Package on 19 June, the proposal will be negotiated in the EPSCO Committees and opinions will be produced by the European Parliament, the European Economic and Social Committee (EESC) and the Committee of the Regions (CoR). The formal adoption by the Council is envisaged for November 2024.

19. What are the main recommendations for the upcoming mid-term review of the Cohesion Policy programmes?

The Cohesion Policy programmes were agreed two years ago and remain indispensable to further narrow economic, social, and territorial disparities across the EU. The focus should be achieving faster impact on the ground, as both the RRF and Cohesion Policy programmes address important socio-economic challenges faced by the EU, the Member States and regions. Therefore, the 2024 country-specific recommendations call on Member States to continue with the implementation of planned priorities at an accelerated pace, strengthening administrative capacity and simplifying procedures, where necessary.

At the same time, the mid-term review of the Cohesion Policy programmes is an opportunity to better address challenges which have become more pressing and prominent over recent years. Targeted orientations are provided in the 2024 country-specific recommendations to encourage Member States to take action in the mid-term review of the Cohesion Policy programmes to better address such challenges. The  country-specific recommendations also invite Member States to consider the opportunities provided by the recently adopted Strategic Technologies for Europe Platform (STEP) initiative to improve competitiveness in the context of the mid-term review.

20. What is the additional analysis of employment, skills and social challenges carried out by the Commission this year?  

In this Semester cycle, the Commission has carried out for the first time a two-stage analysis of employment, skills and social challenges in each Member State. This analysis is based on the revised Social Scoreboard and the principles of a Social Convergence Framework discussed by the EPSCO Council:

• In thefirst-stage analysis, labour market, skills and social policies are analysed for all 27 Member States to identify potential risks to upward social convergence. The first-stage analysis was presented in the proposal for the Joint Employment Report 2024, which was published by the Commission as part of the Semester Autumn Package andadoptedby the Employment, Social Policy, Health and Consumer Affairs Council in March 2024.
• A more detailedsecond-stage analysiswas conducted in relation to the countries for which potential risks to upward social convergence have been identified in the first stage. The analysis waspublishedby the Commission services in May 2024 for seven Member States (Bulgaria, Estonia, Spain, Italy, Lithuania, Hungary, Romania).

The findings of the two-stage analysis are reflected in the country reports, after having informed multilateral discussions in the EPSCO committees, and have served to underpin the Commission’s proposals for country-specific Recommendations.

21. What are the next steps in the European Semester process?

The Commission invites the Eurogroup and Council to discuss the package and endorse the guidance offered today. It looks forward to engaging in a constructive dialogue with the European Parliament on the contents of this package and each subsequent step in the European Semester cycle. More details can be found onEuropean Semester webpage.

The Commission also calls on all EU Member States to implement the recommendations fully and in a timely manner, in close dialogue with their social partners, civil society organisations and other stakeholders.

For more information

• Press release
• 2024 European Semester Spring package
• NextGenerationEU
• Spring 2024 Economic Forecast
• Questions and answers: new economic governance framework fit for the future
• Sustainable development in the European Union – 2024 edition