Implementation of the Macroeconomic Adjustment Programmes in the Euro Area: State-of-Play. CEPS E-Book, 11 March 2014

Two of the four macroeconomic adjustment programmes – in Portugal and Ireland – can be considered a success in the sense that the initial expectations in terms of adjustment, both fiscal and external, were broadly fulfilled. A rebound based on exports has taken hold in these two countries, but a full recovery will take years. In Greece the initial plans were insufficient. While the strong impact of the fiscal adjustment on demand could have been partially anticipated at the time, the resistance to structural reforms was more surprising and remains difficult to cure. The fiscal adjustment is now almost completed, but the external adjustment has not proceeded well. Exports are stagnating despite impressive falls in wage costs. In Cyprus, the outcome has so far been less severe than initially feared. It is still too early to find robust evidence in any country that the programmes have increased the long-term growth potential. Survey-based evidence suggests that structural reforms have not yet taken hold. The EU-led macroeconomic adjustment programmes outside the euro area (e.g. Latvia) seem to have been much stricter, but the adjustment was quicker and followed by a stronger rebound.

The European Semester in Belgium: A state of play. European Policy Brief No. 32, October 2014

After four rounds of the European Semester process of EU economic coordination, Belgium has done relatively little to comply with EU recommendations. This brief substantiates and confirms this claim after clarifying the meaning of these recommendations. While the challenges underlined by the European Commission still lie ahead, Belgium’s ownership of the recommendations for reforms has been low. Not only do coordination processes remain bureaucratic and technocratic, but many of the recommendations’ concerns – external competitiveness, social security reforms, market reforms – are not traditionally defended by the political left in Belgium. The controversy surrounding the recommendations for national structural reforms owes much to their supply-side orientation, which contrasts with the inability of the EU to pursue demand-side policies. But despite this disequilibrium, the recommendations highlight relevant issues that ought to be addressed, and indicate where scope for national debate exists.