title: Council Recommendation of 9 July 2019 on the 2019 National Reform Programme of Finland and delivering a Council opinion on the 2019 Stability Programme of Finland

text:
               5.9.2019

               EN

               Official Journal of the European Union

               C 301/154

      COUNCIL RECOMMENDATION
      of 9 July 2019
      on the 2019 National Reform Programme of Finland and delivering a Council opinion on the 2019 Stability Programme of Finland
      (2019/C 301/26)
      THE COUNCIL OF THE EUROPEAN UNION,
      Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 121(2) and 148(4) thereof,
      Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(2) thereof,
      Having regard to the recommendation of the European Commission,
      Having regard to the resolutions of the European Parliament,
      Having regard to the conclusions of the European Council,
      Having regard to the opinion of the Employment Committee,
      Having regard to the opinion of the Economic and Financial Committee,
      Having regard to the opinion of the Social Protection Committee,
      Having regard to the opinion of the Economic Policy Committee,
      Whereas:

                  (1)

                  On 21 November 2018, the Commission adopted the Annual Growth Survey, marking the start of the 2019 European Semester for economic policy coordination. It took due account of the European Pillar of Social Rights, proclaimed by the European Parliament, the Council and the Commission on 17 November 2017. The priorities of the Annual Growth Survey were endorsed by the European Council on 21 March 2019. On 21 November 2018, on the basis of Regulation (EU) No 1176/2011 of the European Parliament and of the Council (2), the Commission also adopted the Alert Mechanism Report, in which it did not identify Finland as one of the Member States for which an in-depth review would be carried out. On the same date, the Commission also adopted a recommendation for a Council recommendation on the economic policy of the euro area, which was endorsed by the European Council on 21 March 2019. On 9 April 2019, the Council adopted the Recommendation on the economic policy of the euro area (3) (‘2019 Recommendation for the euro area’), which sets out five euro-area recommendations (‘the euro-area recommendations’).

                  (2)

                  As a Member State whose currency is the euro and in view of the close interlinkages between the economies in the economic and monetary union, Finland should ensure the full and timely implementation of the 2019 Recommendation for the euro area, as reflected in recommendations (3) and (4) below. In particular, focusing economic policy related to investment on the specified areas will help address the second euro-area recommendation as regards supporting investment, and measures to contain household indebtedness will help address the fourth euro-area recommendation as regards reducing private debt.

                  (3)

                  The 2019 country report for Finland was published on 27 February 2019. It assessed Finland’s progress in addressing the country-specific recommendations adopted by the Council on 13 July 2018 (4), the follow-up given to the recommendations adopted in previous years and Finland’s progress towards its national Europe 2020 targets.

                  (4)

                  On 4 April 2019, Finland submitted its 2019 National Reform Programme and its 2019 Stability Programme. In order to take account of their interlinkages, the two programmes have been assessed at the same time.

                  (5)

                  Relevant country-specific recommendations have been addressed in the programming of the European Structural and Investment Funds (‘ESI Funds’) for the 2014-2020 period. As provided for in Article 23 of Regulation (EU) No 1303/2013 of the European Parliament and of the Council (5), where it is necessary to support the implementation of relevant Council recommendations, the Commission may request a Member State to review and propose amendments to its Partnership Agreement and relevant programmes. The Commission has provided further details on how it would make use of that provision in guidelines on the application of the measures linking the effectiveness of the ESI Funds to sound economic governance.

                  (6)

                  Finland is currently in the preventive arm of the Stability and Growth Pact. In its 2019 Stability Programme, which was submitted on a no-policy-change basis by the previous government shortly before the general elections in April, the government plans a headline balance of – 0,3 % of gross domestic product (GDP) in 2019, up from – 0,7 % of GDP from 2018. According to the Government, the balance is projected to improve further in 2020 to 0 % and, thereafter, to worsen again to – 0,1 % in 2021 and – 0,3 % in 2022. Based on the recalculated structural balance (6), the medium-term budgetary objective, set at a structural deficit of 0,5 % of GDP, is forecast on a no-policy-change basis to continue to be overachieved throughout the programme period, taking account of the allowances in 2019 linked to the implementation of the structural reforms for which a temporary deviation is granted. The general government debt-to-GDP ratio, which peaked at 63,4 % in 2015, declined to 58,9 % in 2018. According to the 2019 Stability Programme, the debt ratio will continue to decrease and reach 57,4 % of GDP in 2021. It is projected to increase again in 2022 to 57,7 % of GDP. The macroeconomic scenario underpinning those budgetary projections appears to be broadly plausible. The main risks to the budgetary projections relate to the possible larger-than-expected cost of ageing and higher inflation.

                  (7)

                  On 13 July 2018, the Council recommended Finland to achieve the medium-term budgetary objective in 2019, taking account of the allowances linked to the implementation of the structural reforms for which a temporary deviation is granted. This is consistent with a maximum nominal growth rate of net primary government expen-diture (7) of 2,9 % in 2019, corresponding to an allowed deterioration in the structural balance by 0,2 % of GDP. According to the Commission 2019 spring forecast, Finland is expected to be at its medium-term budgetary objective in 2019 taking account of the granted allowance linked to the structural reform clause.

                  (8)

                  In 2020, in view of Finland’s projected output gap of 0,8 %, the nominal growth rate of net primary government expenditure should not exceed 1,9 %, in line with the structural adjustment of 0,5 % of GDP stemming from the commonly agreed adjustment matrix of requirements under the Stability and Growth Pact. According to the Commission 2019 spring forecast under unchanged policies, Finland is projected to be at risk of some deviation in 2020. Overall, the Council is of the opinion that Finland is projected to comply with the provisions of the Stability and Growth Pact in 2019 and needs to stand ready to take further measures to ensure compliance with the provisions of the Stability and Growth Pact in 2020.

                  (9)

                  Due to the ageing population and declining workforce, spending on pensions, health and – especially – social care (long-term care) is projected to increase in the coming decades. According to the 2018 Fiscal Sustainability Report, the projected increase in ageing costs would require a fiscal consolidation amounting to 2 % of GDP to stabilise the debt-to-GDP ratio in the long term. The preparations for a reform of regional government, health and social services, designed to address these challenges and to ensure equal access and reduce waiting times, were discontinued due to the resignation of the Government on 8 March 2019. The ratio of self-declared unmet medical needs in Finland remains above the Union average. In particular, people outside the workforce are having difficulties getting the necessary medical care due to long waiting lists.

                  (10)

                  Amid a shrinking working-age population and rising levels of vacancies, the Finnish labour market is tightening. At the same time, activity and employment rates in Finland are lower than in the other Nordic countries and structural unemployment remains at 7 % in 2018. This partly reflects inactivity and unemployment traps hindering a better use of the labour force. The barriers to getting people back to work include the complex benefits system and the combination of different types of allowances. Benefits are phased out rapidly as income increases,which creates the risk that taking up work might not be sufficiently financially rewarding. Uncertainty surrounding the level of benefits and the time to reinstate them reduces the attractiveness of short-term or part-time work. The basic income experiment, the preliminary results of which were published in February 2019, provides some information for revising the social security system to combine benefits more effectively with earnings.

                  (11)

                  Investments in active inclusion, especially of groups furthest from the labour market, are necessary to increase the participation rate now that activity and employment rates are close to pre-crisis levels. Comprehensive reforms aiming at fostering labour market participation could bring about better opportunities in the labour market for some groups. This concerns people with a migrant background, women at childbearing age, low-skilled men, people partially able to work and persons with disabilities. Some services for the unemployed and inactive are dispersed among separate authorities and providers. Helping these groups to join and remain in the labour market requires tailor-made and integrated activation and rehabilitation services and policies. Long caretaking responsibilities for women contribute to the gender employment gap and the gender pay gap. The government initiated a process to reform family leave, but did not carry it through.

                  (12)

                  Ensuring the supply of labour in times of demographic and technological change is key to fostering sustainable and inclusive growth in Finland. Investing in skills, especially those relevant to the labour market, would help meet the challenges created by structural change in the economy. Technological change calls for continuous training and reskilling of the workforce through flexible ways of learning, including by focusing on adult learning, education and training. This should increase occupational mobility, reducing skills mismatches and helping to meet future labour market needs.

                  (13)

                  Finland is at risk of missing the 2020 municipal waste recycling target of 50 %. In particular, municipal waste is increasingly incinerated (60 % in 2017 compared to 55 % in 2016).

                  (14)

                  While public spending on research and development is now stabilising, Finland experienced the sharpest decline of all theMember States since 2009 in private-sector investment in research and development. Despite an improvement in the macroeconomic situation in recent years, private-sector investment in research and development has not recovered yet. A higher intensity of investment in research and development is a key factor enabling structural change to favour knowledge-intensive sectors of the economy and strengthen long-term growth potential. In addition, cooperation between higher education institutions and the business sector remains one of the key bottlenecks to stimulating innovations and bringing them to the market.

                  (15)

                  With a dispersed population, transport bottlenecks may prevent people from moving to find jobs. Strategic investment in the transport infrastructure may improve labour mobility and thereby strengthen the functioning of labour markets. In parallel, as transport costs have a relatively high impact on the final price of products in Finland compared to other Member States, infrastructure interconnections could enhance access to markets abroad.

                  (16)

                  Strategic investment in decarbonising energy-intensive industries and the transport sector would help achieve long-term economic and climate goals. Finland is a leader in clean energy innovation and private research and development spending in this area. Further investment in some of its clean energy programmes by 2021, as committed, would help Finland meet its carbon neutrality objectives. Besides Finland’s ambitious objectives for increasing the share of biofuels, electrification is a cost-efficient option for decarbonising the transport sector, given the advanced decarbonisation of power generation.

                  (17)

                  Low interest rates and the improved economic outlook have increased the overall volume of lending, especially through housing companies (which provide a distinctive form of home ownership). In parallel, consumer credit is increasing rapidly and a rising share of this lending is granted by foreign banks, financial institutions other than credit institutions, small-loan companies and peer-to-peer lending. Household debt therefore remains at a historically high level (67 % of GDP in 2017). The debt is predominantly at a variable rate, which constitutes a risk if interest rates rise in the medium term. The Finnish Financial Supervisory Authority has adopted a number of measures to contain the increase in the indebtedness of households. However, no active reduction of the debt burden is expected soon, especially as interest rates remain low and consumer confidence is still relatively strong.

                  (18)

                  At this stage, Finland does not have a comprehensive (i.e. collecting both positive and negative information on debtors) credit registry that covers its major banks. The lack of this can prevent banks having a clear overview of households’ overall indebtedness. Some preparatory work for the setting up of a registry of this kind has been carried out in the last year.

                  (19)

                  The programming of Union funds for the period 2021-2027 could help address some of the gaps identified in the recommendations, in particular in the areas covered by Annex D to the 2019 country report. This would allow Finland to make the best use of those funds in respect of the identified sectors, taking into account regional disparities.

                  (20)

                  In the context of the 2019 European Semester, the Commission has carried out a comprehensive analysis of Finland’s economic policy and published it in the 2019 country report. It has also assessed the 2019 Stability Programme, the 2019 National Reform Programme and the follow-up given to the recommendations addressed to Finland in previous years. The Commission has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in Finland, but also their compliance with Union rules and guidance, given the need to strengthen the Union’s overall economic governance by providing Union-level input into future national decisions.

                  (21)

                  In the light of this assessment, the Council has examined the 2019 Stability Programme and its opinion (8) is reflected in particular in recommendation (1) below,

            HEREBY RECOMMENDS that Finland take action in 2019 and 2020 to:

         1.

            Ensure that the nominal growth rate of net primary government expenditure does not exceed 1,9 % in 2020, corresponding to an annual structural adjustment of 0,5 % of GDP. Improve the cost-effectiveness of and equal access to social and healthcare services.

         2.

            Improve incentives to accept work and enhance skills and active inclusion, notably through well-integrated services for the unemployed and the inactive.

         3.

            Focus investment-related economic policy on research and innovation, low carbon and energy transition and sustainable transport, taking into account regional disparities.

         4.

            Strengthen the monitoring of household debt and establish the credit registry system.

         Done at Brussels, 9 July 2019.

               For the Council

               The President

            M. LINTILÄ

         (1)  OJ L 209, 2.8.1997, p. 1.

         (2)  Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances (OJ L 306, 23.11.2011, p. 25).

         (3)  OJ C 136, 12.4.2019, p. 1.

         (4)  OJ C 320, 10.9.2018, p. 112.

         (5)  Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ L 347, 20.12.2013, p. 320).

         (6)  Cyclically-adjusted balance net of one-off and temporary measures, recalculated by the Commission using the commonly agreed methodology.

         (7)  Net primary government expenditure comprises total government expenditure excluding interest expenditure, expenditure on Union programmes fully matched by Union funds revenue and non-discretionary changes in unemployment benefit expenditure. Nationally financed gross fixed capital formation is smoothed over a four-year period. Discretionary revenue measures or revenue increases mandated by law are factored in. One-off measures on both the revenue and expenditure sides are netted out.

         (8)  Under Article 5(2) of Regulation (EC) No 1466/97.


title: Council Recommendation of 9 July 2019 on the 2019 National Reform Programme of Sweden and delivering a Council opinion on the 2019 Convergence Programme of Sweden

text:
               5.9.2019

               EN

               Official Journal of the European Union

               C 301/159

      COUNCIL RECOMMENDATION
      of 9 July 2019
      on the 2019 National Reform Programme of Sweden and delivering a Council opinion on the 2019 Convergence Programme of Sweden
      (2019/C 301/27)
      THE COUNCIL OF THE EUROPEAN UNION,
      Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 121(2) and 148(4) thereof,
      Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(2) thereof,
      Having regard to Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances (2), and in particular Article 6(1) thereof,
      Having regard to the recommendation of the European Commission,
      Having regard to the resolutions of the European Parliament,
      Having regard to the conclusions of the European Council,
      Having regard to the opinion of the Employment Committee,
      Having regard to the opinion of the Economic and Financial Committee,
      Having regard to the opinion of the Social Protection Committee,
      Having regard to the opinion of the Economic Policy Committee,
      Whereas:

                  (1)

                  On 21 November 2018, the Commission adopted the Annual Growth Survey, marking the start of the 2019 European Semester for economic policy coordination. It took due account of the European Pillar of Social Rights, proclaimed by the European Parliament, the Council and the Commission on 17 November 2017. The priorities of the Annual Growth Survey were endorsed by the European Council on 21 March 2019. On 21 November 2018, on the basis of Regulation (EU) No 1176/2011, the Commission also adopted the Alert Mechanism Report, in which it identified Sweden as one of the Member States for which an in-depth review would be carried out.

                  (2)

                  The 2019 country report for Sweden was published on 27 February 2019. It assessed Sweden’s progress in addressing the country-specific recommendation adopted by the Council on 13 July 2018 (3), the follow-up given to the country-specific recommendations adopted in previous years and Sweden’s progress towards its national Europe 2020 targets. It also included an in-depth review under Article 5 of Regulation (EU) No 1176/2011, the results of which were also published on 27 February 2019. The Commission’s analysis led it to conclude that Sweden is experiencing macroeconomic imbalances. In particular, overvalued house price levels coupled with a continued rise in household debt poses risks of a disorderly correction. The high household debt has continued to grow as a share of GDP. There was a correction of house prices in the second half of 2017 and since then they have gradually stabilised. Nevertheless, valuation indicators suggest that house prices remain high relative to fundamentals. Although the banking sector appears adequately capitalised, a disorderly correction would negatively affect the financial sector given the large exposure to household mortgages. In such a case, there could also be negative spill-overs to neighbouring countries given the systemic financial interlinkages. Structural bottlenecks for housing supply persist and construction output has weakened. Although steps have been taken in recent years in the macro prudential field to address mortgage debt growth, the impact so far appears limited. Key policy gaps remain, particularly in relation to tax incentives for home ownership and the functioning of housing supply and the rental market.

                  (3)

                  Sweden submitted its 2019 National Reform Programme on 26 April 2019 and its 2019 Convergence Programme on 29 April 2019. In order to take account of their interlinkages, the two programmes have been assessed at the same time.

                  (4)

                  Relevant country-specific recommendations have been addressed in the programming of the European Structural and Investment Funds (‘ESI Funds’) for the 2014-2020 period. As provided for in Article 23 of Regulation (EU) No 1303/2013 of the European Parliament and of the Council (4), where it is necessary to support the implementation of relevant Council recommendations, the Commission may request a Member State to review and propose amendments to its Partnership Agreement and relevant programmes. The Commission has provided further details on how it would make use of that provision in guidelines on the application of the measures linking the effectiveness of the ESI Funds to sound economic governance.

                  (5)

                  Sweden is currently in the preventive arm of the Stability and Growth Pact. In its 2019 Convergence Programme, the government plans to achieve a surplus of 0,6 % of gross domestic product (GDP) in 2019, which is expected to strengthen further over the programme horizon. Based on the recalculated structural balance (5), the medium-term budgetary objective — a structural deficit of 1 % of GDP — is planned to be overachieved throughout the programme period. According to the 2019 Convergence Programme, the general government debt-to-GDP ratio is expected to fall to 34,5 % in 2019 and to continue declining to 28,2 % in 2022. Sound public finances and a stable economic growth are set to be the main drivers behind the declining general government debt-to-GDP ratio. The macroeconomic scenario underpinning those budgetary projections is plausible. Based on the Commission 2019 spring forecast, the structural balance is forecast to register a surplus of 0,5 % of GDP in 2019 and 0,6 % of GDP in 2020, above medium-term budgetary objective. Overall, the Council is of the opinion that Sweden is projected to comply with the provisions of the Stability and Growth Pact in 2019 and 2020.

                  (6)

                  Household debt has continued to rise from already high levels. Household debt grew by 5,5 % in 2018, reaching about 88 % of GDP and 186 % of disposable income, which is among the highest in the Union. This was driven mainly by higher mortgage borrowing linked to high house prices, coupled with structural distortions favouring mortgage-financed property purchases. Sweden has implemented several macro-prudential measures in recent years, including a strengthened repayment rule for high debt-to-income mortgages in force since March 2018, and a decision to raise the countercyclical capital buffer for banks from September 2019. However, the policy steps taken so far appear to have had limited overall impact on the growth of mortgage lending and no policy action has been taken to reform the tax incentives for home ownership and mortgage debt.

                  (7)

                  While house prices declined in late 2017 and have since been broadly stable, this follows a long period of strong price rises, and valuations remain well above economic fundamentals. Key issues include tax incentives favouring home ownership and mortgage debt, and accommodative credit conditions coupled with still relatively low mortgage repayment rates. Despite a significant increase in new construction over the past five years, a shortage remains, particularly of affordable homes around major cities. New housing supply failed to reach projected near-term needs, estimated at about 90 000 new homes per year for 2018-2020. This shortage is linked to structural inefficiencies, such as limited competition in the construction sector due to barriers to entry for small and foreign firms and the ability of large developers to control land resources. The housing stock is not used efficiently. In the rental market, below-market rents create lock-in and ‘insider/outsider’ effects. In the owner-occupancy market, capital gains taxes reduce homeowner mobility. The housing shortage makes it harder for people to change jobs and can contribute to intergenerational inequality. The Swedish authorities are continuing to gradually implement the ‘22-point plan’ to increase residential construction and improve the efficiency of the housing sector. So far, there have been no concrete policy steps to liberalise tight rental market regulations and revise the capital tax on owner-occupied homes, although in January 2019 the new government announced plans to introduce reforms in these areas, subject to preparatory inquiry work.

                  (8)

                  Labour shortages are emerging in some sectors, such as in construction, education and information and communication technologies. Ensuring a supply of specialist human capital is vital to support research and development investment as well as digitalisation. Investing in education and skills, including digital skills, will help to address those challenges. So far, the educational outcomes have improved somewhat, but there is a large and increasing educational performance gap between different social groups. Demographic developments will lead to an increase in the number of pupils, exacerbating the present shortage of teachers. The situation of non-Union migrants and their descendants and the effects of recently adopted programmes deserve closer monitoring, as the school integration of foreign-born pupils, and the sustainable inclusion of the low-skilled and non-Union migrants (in particular women) into the labour market remain a challenge.

                  (9)

                  Maintaining investments in transport infrastructure can contribute to improved labour mobility, regional cohesion and housing market and foster Sweden’s long-term productivity growth. The government has announced considerable investments in transport infrastructure through the national plan for infrastructure 2018-2029 to upgrade the different transport modes (in particular railway and road). The plan contains major investments to develop the railway system, promoting the switch in goods transport from roads to railways, thus also helping to reduce emissions. Maintaining high levels of investment in research and development, favourable framework conditions and a broader innovation base are key to securing Sweden’s position as innovation leader. Sweden’s innovation model has traditionally relied on a limited number of large, globally active, technology companies. It would be important to create an environment that also nurtures the innovation potential of SMEs and start-ups. Sweden’s innovation capacity could also be further improved by increased collaboration between academia and SMEs.

                  (10)

                  Preventing money laundering has become a priority for Sweden against the background of an evolving money laundering scandal related to one of the largest financial institutions in the country. The Swedish and Estonian financial supervisors have started a joint investigation, together with their Latvian and Lithuanian counterparts. While Sweden’s anti-money-laundering framework has been strengthened in 2017, when the money laundering act entered into force, continued work to identify and correct any remaining deficiencies of the framework remain important. Challenges remain and the supervisor still needs to adopt additional measures and guidelines on how to strengthen supervision in this area. Attention should be paid to the effective implementation of these measures, once adopted.

                  (11)

                  The programming of Union funds for the period 2021-2027 could help address some of the gaps identified in the recommendations, in particular in the areas covered by Annex D to the 2019 country report. This would allow Sweden to make the best use of those funds in respect of the identified sectors, taking into account regional disparities.

                  (12)

                  In the context of the 2019 European Semester, the Commission has carried out a comprehensive analysis of Sweden’s economic policy and published it in the 2019 country report. It has also assessed the 2019 Convergence Programme, the 2019 National Reform Programme and the follow-up given to the recommendations addressed to Sweden in previous years. The Commission has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in Sweden, but also their compliance with Union rules and guidance, given the need to strengthen the Union’s overall economic governance by providing Union-level input into future national decisions.

                  (13)

                  In the light of this assessment, the Council has examined the 2019 Convergence Programme and is of the opinion that Sweden is expected to comply with the Stability and Growth Pact.

                  (14)

                  In the light of the Commission’s in-depth review and this assessment, the Council has examined the 2019 National Reform Programme and the 2019 Convergence Programme. Its recommendations made under Article 6 of Regulation (EU) No 1176/2011 are reflected in recommendation (1) below,

            HEREBY RECOMMENDS that Sweden take action in 2019 and 2020 to:

         1.

            Address risks related to high household debt by gradually reducing the tax deductibility of mortgage interest payments or increasing recurrent property taxes. Stimulate investment in residential construction where shortages are most pressing, in particular by removing structural obstacles to construction. Improve the efficiency of the housing market, including by introducing more flexibility in rental prices and revising the design of the capital gains tax.

         2.

            Focus investment related economic policy on education and skills, maintaining investment in sustainable transport to upgrade the different transport modes, in particular railways, and research and innovation, taking into account regional disparities.

         3.

            Ensure effective supervision and the enforcement of the anti-money-laundering framework.

         Done at Brussels, 9 July 2019.

               For the Council

               The President

            M. LINTILÄ

         (1)  OJ L 209, 2.8.1997, p. 1.

         (2)  OJ L 306, 23.11.2011, p. 25.

         (3)  OJ C 320, 10.9.2018, p. 116.

         (4)  Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ L 347, 20.12.2013, p. 320).

         (5)  Cyclically-adjusted balance net of one-off and temporary measures, recalculated by the Commission using the commonly agreed methodology.


title: Council Recommendation of 9 July 2019 on the 2019 National Reform Programme of the United Kingdom and delivering a Council opinion on the 2018-2019 Convergence Programme of the United Kingdom

text:
               5.9.2019

               EN

               Official Journal of the European Union

               C 301/163

      COUNCIL RECOMMENDATION
      of 9 July 2019
      on the 2019 National Reform Programme of the United Kingdom and delivering a Council opinion on the 2018-2019 Convergence Programme of the United Kingdom
      (2019/C 301/28)
      THE COUNCIL OF THE EUROPEAN UNION,
      Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 121(2) and 148(4) thereof,
      Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(2) thereof,
      Having regard to the recommendation of the European Commission,
      Having regard to the resolutions of the European Parliament,
      Having regard to the conclusions of the European Council,
      Having regard to the opinion of the Employment Committee,
      Having regard to the opinion of the Economic and Financial Committee,
      Having regard to the opinion of the Social Protection Committee,
      Having regard to the opinion of the Economic Policy Committee,
      Whereas:

                  (1)

                  On 21 November 2018, the Commission adopted the Annual Growth Survey, marking the start of the 2019 European Semester for economic policy coordination. It took due account of the European Pillar of Social Rights, proclaimed by the European Parliament, the Council and the Commission on 17 November 2017. The priorities of the Annual Growth Survey were endorsed by the European Council on 21 March 2019. On 21 November 2018, on the basis of Regulation (EU) No 1176/2011 of the European Parliament and of the Council (2), the Commission also adopted the Alert Mechanism Report, in which it did not identify the United Kingdom as one of the Member States for which an in-depth review would be carried out.

                  (2)

                  The 2019 country report for the United Kingdom was published on 27 February 2019. It assessed the United Kingdom’s progress in addressing the country-specific recommendations adopted by the Council on 13 July 2018, the follow-up given to the recommendations adopted in previous years and the United Kingdom’s progress towards its national Europe 2020 targets.

                  (3)

                  On 23 April 2019, the United Kingdom submitted its 2019 National Reform Programme and its 2018-2019 Convergence Programme. In order to take account of their interlinkages, the two programmes have been assessed at the same time.

                  (4)

                  On 29 March 2017, the United Kingdom notified the European Council of its intention to leave the European Union. When the United Kingdom leaves the European Union, it will become a third country. As there is uncertainty over the date and terms of the United Kingdom’s withdrawal, as well as the United Kingdom’s future relations with the Union, this Recommendation does not speculate on the possible economic implications of different scenarios. In the event that the United Kingdom leaves the Union on the basis of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (3) (‘the Withdrawal Agreement’), which has been agreed by the government of the United Kingdom and which the European Council endorsed on 25 November 2018, Union law, including the European Semester, will continue to apply to and in the United Kingdom, for the duration of the transition period established by the Withdrawal Agreement.

                  (5)

                  Relevant country-specific recommendations have been addressed in the programming of the European Structural and Investment Funds (‘ESI Funds’) for the 2014-2020 period. As provided for in Article 23 of Regulation (EU) No 1303/2013 of the European Parliament and of the Council (4), where it is necessary to support the implementation of relevant Council recommendations, the Commission may request a Member State to review and propose amendments to its Partnership Agreement and relevant programmes. The Commission has provided further details on how it would make use of that provision in guidelines on the application of the measures linking the effectiveness of the ESI Funds to sound economic governance.

                  (6)

                  The United Kingdom is currently in the preventive arm of the Stability and Growth Pact and subject to the transitional debt rule until 2019-2020. In its 2018-2019 Convergence Programme, the government expects the headline deficit to increase from 1,2 % of gross domestic product (GDP) in 2018-2019 to 1,4 % of GDP in 2019-2020 and to fall to 1,1 % of GDP in 2020-2021. The Convergence Programme does not include a medium-term budgetary objective. According to the Convergence Programme, the general government debt-to-GDP ratio is expected to fall from 85,5 % in 2018-2019 to 83,8 % in 2019-2020 and to 82,9 % of GDP in 2020-2021. The macroeconomic scenario underpinning those budgetary projections is plausible. While the measures needed to support the planned deficit targets are overall well specified, growing pressures on government expenditure (5) in a number of areas pose a risk to the achievement of the planned deficit path.

                  (7)

                  On 13 July 2018, the Council recommended the United Kingdom to ensure that the nominal growth rate of net primary government expenditure does not exceed 1,6 % in 2019-2020, corresponding to an annual structural adjustment of 0,6 % of GDP. Based on the Commission 2019 spring forecast, there is a risk of a significant deviation from the requirements of the preventive arm in 2019-2020.

                  (8)

                  In 2020-2021, in view of the United Kingdom’s general government debt ratio above 60 % of GDP and projected output gap of 0,3 %, the nominal growth rate of net primary government expenditure should not exceed 1,9 %, in line with the structural adjustment of 0,6 % of GDP stemming from the matrix of requirements under the Stability and Growth Pact. Under unchanged policies, there is a risk of a significant deviation from the requirement in 2020-2021. The United Kingdom is projected to comply with the transitional debt rule in 2019-2020, as a result of the allowed annual deviation of 0,25 %, and with the debt rule in 2020-2021. Overall, the Council is of the opinion that the United Kingdom needs to stand ready to take further measures as of 2019-2020 to comply with the provisions of the Stability and Growth Pact.

                  (9)

                  The United Kingdom has long been the G7 economy with the lowest capital investment as a share of GDP. Investment also fell particularly sharply during the financial crisis, and a post-crisis recovery in private investment has stalled. The United Kingdom’s research and development investment intensity has been around 1,7 % of GDP for the past decade, below the Union average. Through its Industrial Strategy, the United Kingdom has set a whole-economy target of 2,4 % of GDP by 2027 and 3 % of GDP in the longer term. Research and development investment is concentrated in a limited number of companies and regions. These broad-based shortfalls in both physical and human capital are a root cause of the United Kingdom’s relatively low and stagnant labour productivity.

                  (10)

                  The United Kingdom has a persistent housing shortage. A post-crisis recovery in house building has lost momentum. Capacity constraints are emerging while residential construction remains below what is required to meet estimated demand. House prices and rents remain high, especially in areas of high housing demand, with signs of overvaluation. Significantly fewer young adults now own their own homes. The government is implementing a range of measures to boost housing supply. At the same time, the amount and location of land available for new housing remains limited by tight regulation of the land market, particularly around big towns and cities.

                  (11)

                  Major investment is needed to modernise and expand infrastructure networks while bringing down project costs and greenhouse gas emissions. There are growing capacity pressures in road, rail and aviation networks. The United Kingdom needs to deliver significant new and greener energy generation and supply capacity. The United Kingdom’s infrastructure development has tended to be costly and slow. After decades of public under-investment, the government is starting to deal with the infrastructure deficit through its National Infrastructure Strategy, but it will be challenging to secure the amount of outside funding required in the government’s projections in a cost-effective manner.

                  (12)

                  Although unemployment is low, real wages remain below their pre-crisis peak. The high proportion of low-skilled employees has limited career progression prospects, weighing on productivity and contributing to high levels of in-work poverty. There is scope to improve the effectiveness of the education and training systems in basic and technical skills. The government is making reforms to both classroom and work-based training, but overall registrations for the new twin-track system are far fewer than expected.

                  (13)

                  In the context of the 2019 European Semester, the Commission has carried out a comprehensive analysis of the United Kingdom’s economic policy and published it in the 2019 country report. It has also assessed the 2018-2019 Convergence Programme and the 2019 National Reform Programme and the follow-up given to the recommendations addressed to the United Kingdom in previous years. The Commission has taken into account not only their relevance for sustainable fiscal and socioeconomic policy in the United Kingdom, but also their compliance with Union rules and guidance, given the need to strengthen the Union’s overall economic governance by providing Union-level input into future national decisions.

                  (14)

                  In the light of this assessment, the Council has examined the 2018-2019 Convergence Programme and its opinion (6) is reflected in particular in recommendation (1) below,

            HEREBY RECOMMENDS that the United Kingdom take action in 2019 and 2020 to:

         1.

            Ensure that the nominal growth rate of net primary government expenditure does not exceed 1,9 % in 2020-2021, corresponding to an annual structural adjustment of 0,6 % of GDP.

         2.

            Focus investment-related economic policy on research and innovation, housing, training and improving skills, sustainable transport and low carbon and energy transition, taking into account regional diversity.

         Done at Brussels, 9 July 2019.

               For the Council

               The President

            M. LINTILÄ

         (1)  OJ L 209, 2.8.1997, p. 1.

         (2)  Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 on the prevention and correction of macroeconomic imbalances (OJ L 306, 23.11.2011, p. 25).

         (3)  OJ C 66 I, 19.2.2019, p. 1.

         (4)  Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 laying down common provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Maritime and Fisheries Fund and laying down general provisions on the European Regional Development Fund, the European Social Fund, the Cohesion Fund and the European Maritime and Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ L 347, 20.12.2013, p. 320).

         (5)  Net primary government expenditure comprises total government expenditure excluding interest expenditure, expenditure on Union programmes fully matched by Union funds revenue and non-discretionary changes in unemployment benefit expenditure. Nationally financed gross fixed capital formation is smoothed over a four-year period. Discretionary revenue measures or revenue increases mandated by law are factored in. One-off measures on both the revenue and expenditure sides are netted out.

         (6)  Under Article 9(2) of Regulation (EC) No 1466/97.


title: Commission Recommendation (EU) 2019/1888 of 7 November 2019 on the monitoring of the presence of acrylamide in certain foods

text:
               11.11.2019

               EN

               Official Journal of the European Union

               L 290/31

      COMMISSION RECOMMENDATION (EU) 2019/1888
      of 7 November 2019
      on the monitoring of the presence of acrylamide in certain foods
      THE EUROPEAN COMMISSION,
      Having regard to the Treaty on the Functioning of the European Union, and in particular Article 292 thereof,
      Whereas:

                  (1)

                  Commission Regulation (EU) 2017/2158 (1) introduces specific obligations for operators which produce and place on the market certain foodstuffs to establish a programme for own sampling and analysis of the levels of acrylamide in the foodstuffs and apply specific mitigation measures in view of achieving levels of acrylamide as low as reasonably achievable below the benchmark levels established by that Regulation.

                  (2)

                  Regulation (EC) No 882/2004 of the European Parliament and of the Council (2) establishes the obligation for competent authorities to perform official controls to verify compliance with rules aiming, in particular, (a) at preventing, eliminating or reducing to acceptable levels risks to humans and animals, either directly or through the environment and (b) guaranteeing fair practices in feed and food trade and protecting consumer interests, including feed and food labelling and other forms of consumer information. Official controls should be carried out also to verify compliance with obligations established in accordance with Regulation (EU) 2017/2158.

                  (3)

                  It is acknowledged that there are insufficient data available on the presence of acrylamide in certain foods referred to in Article 1(2) of Regulation (EU) 2017/2158, despite the obligations laid down in Article 4 of that Regulation and the results of official controls carried out. There are insufficient data available on the presence of acrylamide also in foods not falling within the scope of Regulation (EU) 2017/2158, but which might contain significant levels of acrylamide and/or could be relevant contributors to the dietary exposure to acrylamide.

                  (4)

                  To ensure a high level of human health protection, it is therefore appropriate that competent authorities and food business operators, within their sphere of competence, without prejudice to the obligations established by Regulation (EU) 2017/2158 and on the basis of Regulation (EC) No 882/2004, monitor the presence of acrylamide in such food in view of the adoption of possible risk management measures, which should complement those already provided by Regulation (EU) 2017/2158.

                  (5)

                  In view of guiding the competent authorities and food business operators as regards the foods to be monitored a non-exhaustive list of food categories/foods is established.

                  (6)

                  With the adoption of Regulation (EU) 2017/2158 and this Recommendation, Commission Recommendations 2010/307/EU (3) and 2013/647/EU (4) become obsolete and should therefore be repealed,

            HAS ADOPTED THIS RECOMMENDATION:

                  (1)

                  Without prejudice to obligations set out on the basis of Regulation (EC) No 882/2004, competent authorities in the Member States should monitor regularly the presence of acrylamide and its levels in food, in particular in the food listed in the Annex.
                  Without prejudice to obligations set out in Regulation (EU) 2017/2158, food business operators should monitor regularly the presence of acrylamide and its levels in food, in particular in the food listed in the Annex.

                  (2)

                  Member States and food business operators should transmit to the European Food Safety Authority (EFSA) by 1 October of each year, the data collected during the previous year through their monitoring activities for compilation into one database, in line with the requirements of EFSA’s Guidance on Standard Sample Description (SSD) for Food and Feed and the additional EFSA’s specific reporting requirements (5).

                  (3)

                  In order to ensure that the samples are representative, Member States should follow the sampling procedures laid down in part B of the Annex to Commission Regulation (EC) No 333/2007 (6).
                  The sampling procedure applied by the food business operator may deviate from the provisions of Regulation (EC) No 333/2007 but should remain representative for the lot.

                  (4)

                  Member States should carry out the analysis of acrylamide in accordance with the criteria laid down in Regulation (EC) No 333/2007.
                  Food business operators should ensure that the analysis of acrylamide is carried out in accordance with the requirements and criteria provided for in Annex III to Regulation (EU) 2017/2158.

                  (5)

                  Recommendations 2010/307/EU and 2013/647/EU are hereby repealed.

         Done at Brussels, 7 November 2019.

               For the Commission

            Vytenis ANDRIUKAITIS

               Member of the Commission

         (1)  Commission Regulation (EU) 2017/2158 of 20 November 2017 establishing mitigation measures and benchmark levels for the reduction of the presence of acrylamide in food (OJ L 304, 21.11.2017, p. 24).

         (2)  Regulation (EC) No 882/2004 of the European Parliament and of the Council of 29 April 2004 on official controls performed to ensure the verification of compliance with feed and food law, animal health and animal welfare rules (OJ L 165 30.4.2004, p. 1).

         (3)  Commission Recommendation 2010/307/EU of 2 June 2010 on the monitoring of acrylamide levels in food (OJ L 137, 3.6.2010, p. 4).

         (4)  Commission Recommendation 2013/647/EU of 8 November 2013 on investigations into the levels of acrylamide in food (OJ L 301, 12.11.2013, p. 15).

         (5)  http://www.efsa.europa.eu/en/consultations/call/180307

         (6)  Commission Regulation (EC) No 333/2007 of 28 March 2007 laying down the methods of sampling and analysis for the official control of the levels of lead, cadmium, mercury, inorganic tin, 3-MCPD and benzo(a)pyrene in foodstuffs (OJ L 88, 29.3.2007, p. 29).

         ANNEX

            NON-EXHAUSTIVE LIST OF FOOD FOR MONITORING OF THE PRESENCE OF ACRYLAMIDE

            Potato products

                     —

                     Rösti

                     —

                     Croquettes, pommes duchesse, pommes noisettes, …

                     —

                     Potato casserole (and vegetable casserole)

                     —

                     Potato and meat meal

                     —

                     Potato and cheese meal

            Bakery products

                     —

                     Rolls (hamburger rolls, whole wheat rolls, milk rolls, …)

                     —

                     Pita bread, Mexican tortillas

                     —

                     Croissants

                     —

                     Doughnuts

                     —

                     Speciality bread (such as pumpernickel bread, ciabatta with olives, onion bread, ...)

                     —

                     Pancakes

                     —

                     Crisp cookies from thin strip of dough and deep fried

                     —

                     Churros

            Cereal products

                     —

                     Rice crackers

                     —

                     Maize crackers

                     —

                     Cereal snacks (such as extruded maize and/or wheat products)

                     —

                     Honey roasted muesli

            Other

                     —

                     Vegetable crisps/fries

                     —

                     Roasted nuts

                     —

                     Roasted oilseeds

                     —

                     Dried fruits

                     —

                     Roasted cocoa beans and derived cocoa products

                     —

                     Olives in brine

                     —

                     Coffee substitutes not based on chicory or cereals

                     —

                     Fudge, caramel, nougat, …