The Economic and Financial Affairs Council (ECOFIN) endorsed on 7 September changes to the manner in which the EU's stability and growth pact is implemented in order to allow a "European semester" to be introduced as part of a reform of EU provisions on economic policy coordination.

The so-called European semester is one of the first initiatives to emerge from the Task Force on economic governance set up at the request of the European Council in March and chaired by the President of the European Council, Herman Van Rompuy. The aim is to boost coordination of the member states' economic policies on the basis of expected results.

The Task Force on economic governance met for the fourth time since it was set up by the European Council on 6 September, and had an in-depth discussion on national fiscal frameworks, macro-economic surveillance and sanctions. President Van Rompuy will make an oral report to the European Council of 16 September on the progress made its last meeting in June.

The European semester

The initiative of the European semester will allow the economic and budgetary policies of the member states to be monitored in parallel during a six-month period every year, starting in 2011, so as to detect any inconsistencies and emerging imbalances.

The new monitoring cycle will start each year in March when, on the basis of a report from the Commission, the European Council will identify the main economic challenges and give strategic advice on policies. Taking this advice into account, the member states will during April review their medium-term budgetary strategies and at the same time draw up national reform programmes setting out the action they will undertake in areas such as employment and social inclusion. In June and July, the European Council and the Council will provide policy advice before the member states finalise their budgets for the following year.

The European semester will be introduced in accordance with a modified code of conduct on implementation of the stability and growth pact, as prepared by the Economic and Financial Committee at the request of the Council. Under the revised code, the member states must ensure that the necessary national procedures are in place to apply these provisions as from next spring. However, with the aim of making the requirements legally binding, the Commission announced its intention to present a proposal for modification of regulation 1466/97.