The European Semester: When Cities and regions are not taken into account

The Council of European Municipalities and Regions (CEMR) recently produced a very interesting report which shows – once again – the disregard shown by EU Member States for Europe’s regions. Even if Brussels is the world capital of city and regional lobbying, there is still a great deal of work to be done to ensure that the regions get the respect they deserve. The day that the concept – which I launched in 2010 at the Committee of the Regions’ Open Days – of “Europe with the regions” (and no longer “Europe of the regions”) really sees the light of day, then it will be possible to have real multi-level European governance. The step must come from the Member States, who – as the examples clearly demonstrate – have every interest in Europe getting closer to its citizens, in local and regional elected representatives taking even greater ownership of European projects, and in ensuring that the real needs of the territories are taken into account. The CEMR report highlights this antagonism through the example of the European Semester. 

The European Semester, an instrument for coordinating the economic and social policies of EU Member States, has seen its influence grow over the years. It has become the EU’s main policy framework, guiding investment and reform priorities for each Member State. However, despite its growing impact on national policies, this process remains largely unknown to the public and to local and regional stakeholders. The CEMR report highlights a major paradox: while the recommendations of the European Semester often concern the competences of sub-national governments, the latter are rarely consulted or involved in the decision-making process.

National recommendations with local consequences

Initially conceived as an economic tool, the European Semester has expanded to encompass areas such as fiscal policy, employment and sustainable development. The resulting country-specific recommendations (CSRs) can cover a wide range of areas, often falling within the remit of local and regional authorities. They include issues such as the state of public finances, the pension system reform, Education and innovation, Employment measures, the implementation of cohesion policy and the recovery plan, the Green and energy transition.

A centralised process that ignores the local realities

Despite the direct or indirect impact of the European Semester on local and regional governments, they are generally not consulted when recommendations are drawn up. This lack of involvement is all the more problematic given that local and regional authorities are often on the front line when it comes to implementing public policies. Their skills and resources are directly affected by decisions taken at European level, whether in terms of investment in the energy transition, employment policies or public services.

Concrete examples of lack of coordination

Several case studies show the consequences of this lack of dialogue between levels of governance:

• In Spain, the national government used the recommendations of the European Semester to include a budget surplus for local authorities in its own budget, without prior consultation.
• In Germany, European directives led to the exclusion of broadband infrastructure projects from cohesion funds, without any consultation with the local authorities concerned.
• In Austria, recommendations on limiting public spending have a direct impact on local budgets, without local authorities having been able to express their point of view.
• In Belgium, risks have been identified by associations of local authorities concerning potential savings that could be made on their allocations by the federal and regional levels, without consultation.
• In the Czech Republic, the lack of coordination between the European Union, the national government and local authorities has an impact on the ability of the latter to benefit from European funds, particularly small municipalities.

Clear demands for greater involvement

The CEMR report stresses the urgent need to reform the European Semester to ensure that local and regional authorities are better taken into account. The CEMR makes a number of recommendations, including

• Recognition of the essential role of local and regional authorities by the European institutions.
• Systematic consultation of local and regional government representatives in the validation of country-specific recommendations and in the preparation of national reform programmes.
• Establishment of regular exchange of experiences on the impact of investments and reforms resulting from the European Semester.
• Integration of territorial and governance impact assessments in the country reports, analysing the different levels of government involved in implementation.
• Taking account of the competences and resources of sub-national governments when defining objectives and proposed measures.
• Promotion of fiscal decentralisation and financial autonomy for local authorities.
• Introduction of a « golden rule ’ to preserve and encourage local and regional public investment in the long term.

Through this very practical approach, illustrated with concrete examples, this report shows that the European Semester, in its current form, is a centralised process that too often ignores the reality and specificities of the territories. It is crucial to rethink the way it works, so that local and regional authorities are seen as partners in their own right, and not simply as implementing decisions taken in the European bubble in Brussels and the national capitals. A multi-level approach and enhanced dialogue are essential to ensure the effectiveness and relevance of European public policies, and to respond to the challenges that European citizens face on a daily basis. The recommendations made by the CEMR offer a roadmap for achieving more inclusive and effective European governance.