EUROPEAN ECONOMY IN SEARCH OF GROWTH
     
For several years the European Union has been focusing on solving the crisis, but now the European economy has to get back on track. The European leaders discussed this at the Spring European Council of 1-2 March. The Summit evolved around the European Semester, the monitoring of the economic policies of the member states. The European leaders are facing a major challenge. The Lisbon process has failed and the European Commission describes the progress on the Europe 2020 strategy as disappointing. The question is whether the member states will follow the recommendation, by the European Commission to modernise the pension systems, reforming employment protection legislation and make tax systems more effective, efficient and fairer. The Netherlands Institute of International Relations 'Clingendael' organised a seminar on the economic growth and the upcoming European Council meeting on Monday 27 February 2012. MEP Corien Wortmann and Professor Jacques Pelkmans gave a lecture and engaged in a debate on economic growth in Europe ahead of the European Council meeting

Dr. Corien Wortmann is a Member of the European Parliament for the CDA / EPP. She is Vice Chairman of the EPP group. On behalf of the European Parliament she has negotiated on the strengthening of the Stability and Growth Pact, the 'six pack' for economic governance in Europe. Prof. Dr. Jacques Pelkmans is holder of the Jan Tinbergen Chair at the College of Europe in Bruges and Director of the Economic Faculty of the College of Europe. He is also Senior Research Fellow at the Centre for European Policy Studies (CEPS) in Brussels. Dr. Adriaan Schout, Deputy Head of Research at the Clingendael Institute, chaired the meeting.

ALERT MECHANISM REPORT (AMR)

One key lesson from the crisis has been that more attention needs to be paid to macroeconomic imbalances and divergences in competitiveness between EU countries. In some cases, current account imbalances and divergences in price competitiveness have reached unprecedented and unsustainable levels, and this goes well beyond a natural catching-up process or demographic determinants of the past decade.

This does not imply a lack of surveillance on imbalances in the past. On the contrary, macroeconomic imbalances have been continuously monitored within the context of the EU's Broad Economic Policy Guidelines (BEPG). In addition, there has been a number of country-specific recommendations related to macroeconomic imbalances. However, experience has shown that surveillance must be followed up by proper enforcement given the potential harmful spill-over effects between countries in the EU, and in the euro area in particular. There is thus a clear need for a stronger framework and reinforced governance, including financial disincentives, to ensure that recommendations are appropriately taken into account at national level.

The Macroeconomic Imbalance Procedure (MIP), and the regulation to enforce it, respond to this challenge. The MIP gives the European Commission and the Council of Ministers the possibility to take action before the imbalances reach unstable levels. The new procedure is part of a comprehensive set of rules that entered into force on 13 December 2011, the so-called "six-pack", which reinforces the monitoring and surveillance of fiscal policies as well as macroeconomic policies in all 27 EU Member States (MEMO/11/898). Surveillance of macroeconomic imbalances under the MIP is an integral part of the "European semester", the economic policy cycle that integrates economic, budgetary and structural reform as well as measures to help boost growth (MEMO/11/364).

14 February 2012 the first Alert Mechanism Report (AMR) on macroeconomic imbalances (MIP) in Member States was published.