The European Semester is a cycle of economic and fiscal policy coordination within the EU. It is part of the European Union's economic governance framework.
Its focus is on the 6-month period from the beginning of each year, hence its name - the 'semester'.
During the European Semester the member states align their budgetary and economic policies with the objectives and rules agreed at the EU level.
The European Semester covers 3 blocks of economic policy coordination:
The recent economic crisis demonstrated a need for stronger economic governance and better policy coordination between the EU member states.
In a Union of highly integrated economies, enhanced policy coordination can help prevent discrepancies and contribute to ensuring convergence and stability in the EU as a whole, and in its member states.
The economic policy coordination procedures that existed until 2010 were carried out independently of each other.
The member states therefore saw the need to synchronize the timetables of these procedures in order to streamline the process and to better align the goals of national budgetary, growth and employment policies, while taking into account the objectives they have set at the EU level.
Furthermore, there was a need to extend the areas of surveillance and coordination to broader macroeconomic policies.
For these reasons and as a part of a wider reform of the EU economic governance, the European Council decided to establish the European Semester in 2010. The legal basis for the process is the so-called 'six-pack' - 6 legislative acts that reformed the Stability and Growth Pact. The first European Semester cycle took place in 2011.