Economic Policy Coordination in the Euro Area under the European Semester. CEPS Special Report No. 123, December 2015

The implementation record of the Country Specific Recommendations (CSRs) has declined over time, as financial turbulence lessened and the economic outlook started to improve. Urgency for reforms seemingly receded to leave room to request member states to move towards more accommodative stances. It is mainly the small countries that implement, at least partially, the recommendations addressed to them. Unfortunately, there is little that the EU can do to change the status quo. Yet, the President of the Eurogroup could be held accountable for the implementation of the recommendations addressed to the euro area. The creation of National Competitiveness Boards risks making the European Semester even more complex and likely to have little impact in the countries that need them most, namely large countries and those with poor governance. To make it effective, a procedure would be needed to make national wage norms consistent at the euro-area level, which may be a very difficult objective to achieve.