The European Semester: only a first step

In 2010 the euro faced a public debt crisis which was largely the result of the global financial crisis. Public debts and deficits both increased as a consequence of recession-related factors: the transfer of private debt to the state (mainly due to the public commitment to save the banking system), a fall in tax revenues because of higher unemployment and increased public spending due to automatic stabilisers. But the euro crisis was also a result of certain weaknesses in the Economic and Monetary Union (EMU), and of structural problems in eurozone countries (in particular, gaps in competitiveness between them). The crisis thus proved right those who, for over a decade, have called for a genuine economic pillar within EMU. It highlighted the gaps in the coordination and surveillance of eurozone economic policies, and demonstrated the interdependence of the countries which share the single currency.

In this context the EU needed a response to the urgency of the sovereign debt crisis. It adopted a package of aid to Greece and a mechanism aiming to guarantee eurozone stability. Alongside this short-term action there was debate on reform of European economic governance, fed by the European Commission and proposals of the task force chaired by Herman Van Rompuy. From this debate was born the idea of a “European Semester”. This brief outlines the content and the procedure of this new feature of post-crisis economic governance, and discusses several important new issues surrounding it. The European Semester represents a step forward in European economic governance. It is nonetheless insufficient if the EMU is to have the economic pillar it needs.