Euro area economic policy recommendations for 2016-2017

 

SUMMARY OF:

Council recommendation to euro area members on economic policy actions to be taken individually and collectively

WHAT IS THE AIM OF THE RECOMMENDATION?

It recommends how the euro area countries should, collectively and individually, conduct their economic policies over the coming 12 months.

KEY POINTS

The recommendations state that euro countries should:

• Follow policies that:
  • support economic recovery and convergence;
  • correct macroeconomic imbalances; and
  • improve their ability to respond to external shocks (‘adjustment capacity’).
• Implement reforms that combine:
  • flexible and reliable labour contracts;
  • comprehensive lifelong learning programmes;
  • policies helping the unemployed find a job;
  • adequate and sustainable social protection schemes;
  • open and competitive markets for goods and services;
  • lower tax burdens on labour, particularly for low earners.
• Follow fiscal policies that respect the rules of the Stability and Growth Pact, in particular:
  • for 2016, aiming for a broadly neutral balance between taxes and government spending (‘broadly neutral aggregate fiscal stance’) appears appropriate;
  • for 2017, reducing public debt;
  • tailoring efforts to the situation of individual euro countries;
  • reviewing the expected and desired impact on the future euro area economy from taxation and government spending (‘fiscal stance’).
• Enable the gradual reduction of bank loans that are in, or close to, default (‘non-performing loans’) and improve bankruptcy procedures for companies and households.
• Continue work on completion of economic and monetary union.
• EU countries, particularly those with large private and foreign debt, should implement reforms to improve productivity, job creation, competitiveness and the business environment.
• EU countries with large current account surpluses should focus on structural reforms to strengthen domestic demand and growth.

BACKGROUND

The economic policy recommendations form part of the EU’s annual cycle of economic policy guidance and surveillance, known as the European Semester.

For the first time, in March 2016, the euro area economic policy recommendations were adopted before those tailored to individual euro area countries. This is designed to better reflect the overall euro area challenges within the specific national reports.

For more information, see:

• ‘European Semester in 2016’ on the Council of the European Union's website

MAIN DOCUMENT

Council Recommendation of 8 March 2016 on the economic policy of the euro area (OJ C 96, 11.3.2016, pp. 1–3)

last update 02.08.2016