The European Commission has released its guidance to Member States under the 2023 European Semester Spring Package, outlining the necessary steps to build a robust and future-proof economy amid a challenging geopolitical environment. The guidance emphasizes the importance of integrated policies across all sectors to promote environmental sustainability, productivity, fairness, and macroeconomic stability. By embedding the implementation of the Recovery and Resilience Facility (RRF) and cohesion policy programs, the European Semester serves as a policy coordination framework to achieve these objectives. Furthermore, it provides updated reporting on progress toward the Sustainable Development Goals across Member States.
Despite ongoing challenges, the European economy has exhibited resilience within the global context. The first quarter of 2023 saw moderate growth, supported by lower energy prices, easing supply constraints, and a strong labor market, dispelling concerns of a recession. However, core inflation has shown signs of firming, leading to further tightening of financial conditions, while overall inflation continues to decline.
According to the Spring 2023 Economic Forecast, the EU economy is projected to grow by 1.0% in 2023 and 1.7% in 2024. Inflation is expected to reach 6.7% in 2023 and 3.1% in 2024. Employment growth is forecasted at 0.5% this year, with a slight decrease to 0.4% in 2024. The unemployment rate is projected to remain slightly above 6%.
The effective implementation of the Recovery and Resilience Facility and cohesion policy programs is highlighted as crucial drivers for building a robust and future-proof EU economy. The RRF, at the core of the €800 billion NextGenerationEU recovery plan, continues to facilitate a fair and inclusive green and digital transition in every Member State, enhancing the EU’s overall resilience. The European Semester integrates the RRF and cohesion policy programs, offering policy guidance to Member States in addressing key economic and social challenges.
With all national recovery and resilience plans in place and significant progress made, the European Commission has already disbursed over €152 billion under the RRF to support key reforms and investments. The Commission urges Member States to maintain the momentum in implementing their plans, while also swiftly executing cohesion policy programs. Key areas of focus include decarbonizing the EU’s economy and industrial base, addressing labor and skills shortages, promoting quality job creation, scaling up research and innovation, and fostering the conditions for the EU’s long-term prosperity, competitiveness, fairness, and resilience. The inclusion of REPowerEU chapters in Member States’ plans, accompanied by additional funding, will facilitate the shift towards clean energy supplies and a net-zero economy, addressing energy security challenges.
To support the green and digital transitions and enhance competitiveness, the Commission proposes targeted recommendations to each Member State in the 2023 country reports. These recommendations are designed to address specific socio-economic challenges and assess the extent to which they are being adequately tackled in the countries’ recovery and resilience plans. The recommendations will also contribute to the implementation of the Green Deal Industrial Plan.
The country-specific recommendations encompass four key areas: fiscal policy and structural reforms, continued implementation and revision of national recovery and resilience plans, updated energy policy in line with REPowerEU objectives, and additional recommendations on emerging structural challenges where relevant.
Regarding fiscal policy, Member States that have achieved their medium-term budgetary objectives are encouraged to maintain a sound fiscal position in 2024. Other Member States are advised to adopt prudent fiscal policies, particularly by limiting the increase in nationally financed net primary expenditure. Additionally, all Member States are urged to preserve public investment and ensure the effective utilization of grants