Good morning everyone,
The college meeting has just ended and we are here to talk about the European Semester Winter Package. But before going there let me outline some other points we discussed today.
Let me start by briefly informing you about our discussion on Coronavirus Covid-19.
Our thoughts are with those affected and the human cost of this epidemic. We are doing all we can to help contain the spread of this virus.
We discussed the state of play regarding the number of infections in the European Union and the measures taken so far to support our Member States in tackling it.
We further discussed the coordination with Member States on measures taken to contain the spread of the virus, and about the guidance issued to staff of the European Commission in relation to travelling to the areas affected by the spread of the virus.
And we also discussed the possible economic impact of the spread of the virus on the world economy and on the EU economy, and possible sectors affected.
Then, President von der Leyen also informed the College on the appointment of Maroš Šefčovič, Vice-President of the Commission, as the EU's representative and Co-Chair of the Joint Committee established by the UK Withdrawal Agreement.
The Joint Committee is made up of representatives from both the EU and the UK and is overseeing the implementation and application of the Withdrawal Agreement.
And now let me move to the European Semester.
I will first run you through the key findings coming out of our country analyses.
Economic and financial stability remains an important precondition for sustainable growth and job creation.
It is therefore worrying that high levels of debt continue to persist in some countries. We need more differentiated fiscal policies to reduce those divergences.
Member States are still struggling to get back to their pre-crisis public investment levels. At the same time, other types of government expenditure are now higher than before the crisis. There is therefore a need to improve the quality of public finances.
Europe's financial sector is clearly in better shape than a few years ago, with higher capital and lower non-performing loans. Nonetheless, there are still pockets of weakness.
Productivity growth remains a challenge in Europe. We need to remove investment barriers and step up investment in new technologies. A stronger performance on research and innovation as well as excellent education and skills are crucial to increase productivity and to adapt to the climate and digital transformation.
Our country reports also address social developments and challenges in Member States. Inclusive growth and the reduction of income inequalities remain a focal point of our analysis. Nicolas will say more on this.
Let me now say a few words on the Macro-economic Imbalances Procedure. Three countries are now in excessive imbalance procedures and 10 are experiencing imbalances. Paolo will give you the full overview.
I would like to highlight one positive development: the imbalances in Bulgaria have been corrected. Bulgaria has made important progress in strengthening financial sector governance, corporate debt has fallen and the non-performing loans ratio has declined.
This shows that a sustained commitment to sound policies and reforms brings good results.
There is unfortunately also less good news. In Romania, the deficit was above 3% of GDP in 2019 and is expected to stay above 3% both this year and next. This reflects the longstanding build-up of fiscal imbalances as a result of pro-cyclical strongly expansionary fiscal policy since 2016. That's why we adopted a Report on 14 February, concluding that the opening of an Excessive Deficit Procedure is warranted. Member States in the Economic and Financial Committee have just provided their opinion, confirming the Commission's assessment. The Commission therefore intends to come up with a proposal to open the excessive deficit procedure next week.
Finally, today we have also adopted a fifth report under Enhanced Surveillance for Greece. We will present this reportat the next Eurogroup. Greece has progressed well in implementing its reform commitments. We expect the supplementary measures that the government has pledged to implement to bear fruit in time for the sixth report in May. Based on progress by then, Member States may in the June Eurogroup discuss the possible use of ANFA and SMP proceeds to reduce financing needs or to finance investments.
We encourage Greek authorities to keep up the reforms, especially in the financial sector, where significant further action is needed.
Ladies and gentlemen,
This time around, we have also added in three innovations in our assessment of Member States' performance and policies. We have brought the Semester more closely into step with our Green Deal and you'll see that our analyses reflect our ambition on sustainable growth strategy.
First, we have introduced a dedicated analysis of environmental sustainability, focused on the economy and employment. The clear conclusion is that significant and targeted investment as well as deep economic reforms will be needed to achieve the green transition.
As I stressed already when presenting the Annual Sustainable Growth Strategy in December, the transition will have an impact on everybody. But not all population groups and regions have the same capacity to respond. That's why we proposed a Just Transition Fund.
Therefore, as a second innovation, today's country reports include an analysis of the transition challenges in each country, and present our services' preliminary views on how and where the Fund could provide support. This is meant to be a useful first input for Member States when preparing their territorial Just Transition Plans.
In early March, Member States will be invited to send their requests for technical support to the Commission - we will fully support national efforts directed at ensuring a just transition towards climate neutrality.
A third new element is that we have integrated the United Nations Sustainable Development Goals into the Semester, as part of our efforts to put sustainable development at the heart of economic policy. Paolo will explain this more in detail.
I will stop here. Thank you and I will now pass the floor to Paolo.