DAILY NEWS
Brussels, 04 June 2025
2025 European Semester Spring Package sets out guidance to boost EU competitiveness
The 2025 European Semester Spring Package analyses the key economic and social challenges across the EU and offers policy guidance to Member States with the aim of strengthening competitiveness, prosperity and resilience. To that effect, it includes country-specific recommendations (CSRs), and promotes reforms and investments aligned with these EU priorities.
The policy guidance presented comes at a time of a particularly volatile trade and security environment. It is closely linked to the Competitiveness Compass, the Commission's five-year roadmap to boost the EU's resilience and global standing. Today's package also marks the first assessment of Member States' progress under the revised economic governance framework and their fiscal-structural plans. Amid rising security challenges, the national escape clause (NEC) under the Stability and Growth Pact is also drawn upon for the first time. The aim of the NEC is to facilitate the transition to higher levels of defence expenditure while safeguarding fiscal sustainability.
Targeted recommendations to Member States
The 2025 country reports assess economic, employment and social developments in each Member State, in line with the priorities set out in the Competitiveness Compass. Member States are encouraged to boost their competitiveness by closing the innovation gap, advancing decarbonisation in line with the Clean Industrial Deal, reducing excessive dependencies, increasing security and resilience, including by building up defence capabilities and promoting skills and quality jobs while ensuring social fairness.
To support competitiveness across all sectors, the Competitiveness Compass sets out five horizontal enablers that are also reflected in the country-specific recommendations, tailored to each Member State.
This year's country reports also take stock of the implementation of recovery and resilience plans (RRPs) and Cohesion Policy programmes. With the Recovery and Resilience Facility (RRF) ending in 2026, swift and targeted implementation is essential, with most Member States having to accelerate progress. In parallel, the Commission publishes today a Communication on the RRF towards 2026, to give guidance to Member States on a smooth and successful closure of the instrument. The Commission also seeks to accelerate cohesion policy delivery, focusing on strategic priorities from the mid-term review.
Taking on board the policy objectives of the EU, this year's CSRs provide guidance tailored to the specific needs of each Member State. They reflect the scale and urgency of required action, across three key areas: (i) fiscal policy, including reforms to increase the effectiveness of tax policy and public expenditures, (ii) implementation of RRP and cohesion policy programmes, and (iii) outstanding and/or newly emerging structural challenges, focusing on the Competitiveness Compass.
Strengthening fiscal sustainability
The Spring 2025 European Semester package concludes the first full year of macroeconomic surveillance under the revised governance framework. It assesses Member States' progress in implementing their medium-term fiscal-structural plans submitted last autumn. The Commission evaluates compliance by comparing projected net expenditure growth with the ceilings set by the Council or outlined in the national plans.
This year's package underscores the flexibility of the revised framework to respond to unexpected challenges. Under the ReArm Europe Plan/Readiness 2030 presented in March 2025, the Commission proposed activating the national escape clause, allowing Member States to temporarily exceed maximum growth rates of net expenditure to boost defence spending. At the request of 16 Member States (Belgium, Bulgaria, Croatia, Czechia, Denmark, Estonia, Finland, Germany, Greece, Hungary, Latvia, Lithuania, Poland, Portugal, Slovakia and Slovenia), the Commission has today adopted recommendations to the Council for the activation of the national escape clause for the countries concerned.
Fiscal surveillance
Regarding Member States under excessive deficit procedure (EDP), the Commission considers that for France, Italy, Hungary, Malta, Poland and Slovakia no further steps need to be taken under the EDP for these countries at this stage.
For Belgium, following the submission of its medium-term plan, the Commission has recommended a new corrective path, currently pending Council adoption. While Belgium's projected net expenditure growth in 2025 exceeds the ceiling of this recommendation, it remains within the flexibility provided by the national escape clause.
In contrast, Romania's net expenditure growth is significantly above the ceiling set by its corrective path, posing clear risks to correcting its excessive deficit by 2030. The Commission is therefore recommending that the Council adopt a decision that establishes Romania has not taken effective action.
The Commission has also assessed progress on the implementation of medium-term plans of 18 Member States. 12 Member States (Austria, Bulgaria, Croatia, Czechia, Denmark, Estonia, Finland, Greece, Latvia, Lithuania, Slovenia, Sweden) are assessed to be compliant with the recommended maximum net expenditure growth, taking into account flexibility under the national escape clause, if relevant. Portugal and Spain are broadly compliant, with limited deviations from their recommended paths. However, for Cyprus, Ireland, Luxembourg and the Netherlands, the Commission sees a risk of deviation from the recommended maximum growth rates set by the Council.
The Commission also prepared a Report under Article 126(3) of the Treaty on the Functioning of the EU (TFEU) to assess compliance with the Treaty's deficit criterion for four Member States: Austria, Finland, Latvia and Spain. In light of the assessment contained in the report, opening of a deficit-based excessive deficit procedure is warranted for Austria. After considering the opinion of the Economic and Financial Committee, the Commission intends to propose to the Council to open deficit-based excessive deficit procedures for Austria and propose to the Council recommendations to put an end to the excessive deficit situation.
Assessing macroeconomic imbalances
The Commission has assessed the existence of macroeconomic imbalances in the 10 Member States selected for in-depth reviews under the 2025 Alert Mechanism Report. While economic developments over the past year have helped ease some imbalances in several Member States, rising uncertainty in shifting trade context is compounding risks.
Estonia is not experiencing imbalances as vulnerabilities relating to deteriorating price and cost competitiveness and house prices seem to be contained at present.
Cyprus is reclassified as experiencing ‘no imbalances', as vulnerabilities related to external and private debt are receding, partly due to strong economic growth, while government debt is being reduced thanks to continued budgetary surpluses.
Germany is also reclassified as experiencing ‘no imbalances' as vulnerabilities related to the large current account surplus have declined over the years, and significant policy progress has recently been announced.
Hungary, Greece, Italy, the Netherlands, Slovakia, and Sweden continue to experience imbalances, as their vulnerabilities remain overall relevant.
Romania continues to experience excessive imbalances as its fiscal and current account deficits widened and cost competitiveness deteriorated in 2024.
Employment guidelines and social convergence challenges
As part of the 2025 European Semester, the Commission is proposing updated guidelines for Member States' employment policies, aimed at promoting fairer and more inclusive labour markets. Building on the Employment Guidelines adopted in December 2024 –which address challenges like skills and labour shortages and the need for basic and digital skills in the age of artificial intelligence – the 2025 update maintains the core priorities while adapting to new geopolitical realities and initiatives such as the Union of Skills and the Competitiveness Compass.
In line with the Social Convergence Framework, now embedded in the revised economic governance framework, the Commission has conducted a two-stage analysis of employment, skills and social challenges in each Member State. The first-stage findings are presented in the Joint Employment Report (JER) 2025, while the more in-depth second-stage analysis was published in April 2025 for ten Member States: Bulgaria, Croatia, Estonia, Greece, Hungary, Italy, Lithuania, Luxembourg, Romania, and Spain. Overall, the second-stage analysis identified challenges to upward social convergence for three Member States (Greece, Italy and Romania), taking into account the policy responses undertaken or planned by the Member States to address the identified risks. The findings from the analysis were also discussed with Member States in the Employment Committee and the Social Protection Committee in May, ahead of the adoption of the 2025 European Semester Spring Package.
For more information
Questions and answers on the 2025 European Semester Spring Package
2025 European Semester Autumn package
Spring 2025 Economic Forecast
The European Semester
The Recovery and Resilience Facility
NextGenerationEU
Cohesion Policy
The REPowerEU Plan
Quote(s)
The European Semester is the basis of a more integrated approach of the members states’ economic policies. This Commission is determined to deepen our integration of the single market and to coordinate the collective efforts for competitiveness. This year’s recommendations are the continuity of our reform agenda and aim at emboldening member states in their strive for more innovation, more decarbonized industries and more strategic autonomy.
Stéphane Séjourné, Executive Vice-President for Prosperity and Industrial Strategy
For the first time, and as part of the Union of Skills - this Semester package contains key recommendations on skills, quality jobs and social fairness to every single country. Education is critical to having a skilled labour force, and importantly it also reinforces healthy societies and functioning democracies. Secondly, the social convergence framework is an important element of the Semester - allowing us to work closely with Member States to better understand where reforms and investments are most needed, and how best we can support them - leveraging EU funding from the RRF and ESF+, which is crucial to maintaining strong social cohesion across Europe. Investment and reforms to support people need to continue as fundamental priorities at European level.
Roxana Mînzatu, Executive Vice-President for Social Rights and Skills, Quality Jobs and Preparedness
This year's European Semester Spring Package comes at a time when the EU continues to face remarkably high global uncertainty, trade tensions and grave security threats. The priorities of this year's Spring Package can be summarised in two words: competitiveness and security. Indeed, this brings us back to the basics of the European project: peace and prosperity. While the main focus of the European Semester remains fiscal sustainability and macroeconomic stability, it is likewise a key mechanism to coordinate our common push for competitiveness, security, resilience and sustainable prosperity. I look forward to engaging with Member States to drive forward our common priorities on the basis of today's Spring Package.
Valdis Dombrovskis, Commissioner for Economy and Productivity; Implementation and Simplification
Bulgaria meets criteria to join the euro area on 1 January 2026
Today, the European Commission concluded that Bulgaria is ready to adopt the euro as of 1 January 2026 – a key milestone that would make it the twenty-first Member State to join the euro area. This assessment is set out in the 2025 Convergence Report, prepared at the request of the Bulgarian authorities and marks a critical and historic step on Bulgaria's journey towards euro adoption.
The Report finds that Bulgaria fulfils the four nominal convergence criteria, which are intended to ensure that a country is ready to adopt the euro and that its economy is sufficiently prepared to do so. The Member State's legislation is also found to be compatible with the requirements of the Treaty and the Statute of the European System of Central Banks and of the European Central Bank (ECB). The Commission's assessment also considers additional factors relevant to economic integration and convergence, including balance of payments developments and the integration of product, labour and financial markets.
This assessment is complemented by the ECB's own Convergence Report, also published today.
Ursula von der Leyen, President of the European Commission said: “The euro is a tangible symbol of European strength and unity. Today, Bulgaria is one step closer to its adoption as currency. Thanks to the euro, Bulgaria's economy will become stronger, with more trade with euro area partners, foreign direct investment, access to finance, quality jobs and real incomes. And Bulgaria will take its rightful place in shaping the decisions at the heart of the euro area. Congratulations, Bulgaria!”
Next steps
As a result of this assessment, the Commission has also adopted proposals for a Council Decision and a Council Regulation on euro introduction in Bulgaria on 1 January 2026. The Council of the EU will take the final decisions on Bulgaria's euro adoption, following discussions in the Eurogroup and the European Council, and after the European Parliament and the ECB have delivered their opinions.
Background
The Convergence Report prepared by the European Commission forms the basis for the Council of the EU's decision on whether a Member State fulfils the conditions required to join the euro area.
The Commission's report is published in parallel with the Convergence Report of the ECB.
Convergence Reports are issued every two years, or in response to a specific request by a Member State to assess its readiness to join the euro area. The Commission received Bulgaria's request for a special Convergence Report in February 2025 with the aim of adopting the euro in 2026.
Questions and answers: Convergence Report 2025 on Bulgaria
European Commission Convergence Report 2025
ECB Convergence Report 2025
Previous Convergence Reports
The Euro
Economic and Monetary Union
The euro is a tangible symbol of European strength and unity. Today, Bulgaria is one step closer to its adoption as currency. Thanks to the euro, Bulgaria’s economy will become stronger, with more trade with euro area partners, foreign direct investment, access to finance, quality jobs and real incomes. And Bulgaria will take its rightful place in shaping the decisions at the heart of the euro area. Congratulations, Bulgaria!
Ursula von der Leyen, President of the European Commission
Today's report is a historic moment for Bulgaria, the euro area and the European Union. Bulgaria has met all the convergence criteria to become the 21st member of the Eurozone. Today's announcement is the culmination of a five-year journey, since it entered ERM II in 2020. The euro will bring tangible benefits for Bulgarian citizens and businesses: stable prices, lower transaction costs, protected savings, more investment, and increased trade. Of course, the euro is more than a currency. Following on from Bulgaria becoming a full member of the Schengen Area earlier this year, it brings Bulgaria ever closer to the heart of Europe. Bulgaria's successful integration in the euro area will require continued strong policies to strengthen the competitiveness and resilience of the Bulgarian economy.
EU budget 2026: Providing crucial funding for EU priorities in times of global volatility
Today's proposal by the European Commission sets the 2026 EU budget at €193.26 billion, complemented by an estimated €105.32 billion in disbursements under NextGenerationEU. Building on the mid-term revision of the EU's Multiannual Financial Framework (MFF), next year's draft budget is designed to support strategic objectives, including support for Ukraine, competitiveness, migration management, security and defence, and strategic investments, while maintaining momentum on green and digital priorities.
This budget proposal comes after a series of unpredicted developments over the 2021-2027 MFF period, including a global pandemic, an energy crisis and spiking inflation, the return of war on the European continent, and growing geopolitical tensions on the global scene.
The EU budget continues to show its versatility in addressing new developments within a constrained framework. However, it has also demonstrated the limits of its means, requiring a mid-term revision to address the most pressing issues, including the additional needs for Ukraine, migration management, responding to the crisis in the Middle East, among others. The revision has guaranteed sufficient funding for ongoing priorities such as the green and digital transition, while stimulating economic recovery after the COVID-19 pandemic outbreak.
The draft budget for 2026 will continue to provide crucial funding for the EU's political priorities. It includes stable and predictable funding for Ukraine through the Ukraine Facility, as well as reinforced funding for security and defence, asylum and migration. Moreover, a major development in the Draft Budget is the additional funding foreseen under the Cohesion Mid-Term review proposal. This creates major incentives and flexibilities for Member States to reprogramme available Cohesion funding towards emerging priorities, notably in the areas of competitiveness, defence, affordable housing, water resilience and energy transition.
The Commission proposes to allocate the following amounts to the various EU priorities:
Policy Area
Amounts committed (in EUR bn)
1. Single Market, Innovation and Digital
22,054.4
2. Cohesion, Resilience and Values
71,726.1
— Economic, social and territorial cohesion
56,592.5
— Resilience and Values
15,133.6
3. Natural Resources and Environment
56,971.9
—Of which Market related expenditure and direct payments
40,465.2
4. Migration and Border management
5,010.0
5. Security and Defence
2,803.5
6. Neighbourhood and the World
15,505.0
7. European Public Administration
13,475.2
Thematic special instruments
5,715.9
Total appropriations
193,262.0
The full overview of the Commission proposal for the Draft Annual Budget can be found in the 'Questions & Answers' document.
The annual budget for 2026 will have to be formally adopted by the Budgetary Authority before the end of the year.
The draft EU budget for 2026 includes the expenditure covered by the appropriations under the long-term budget ceilings, financed from own resources. These are topped up by expenditure under NextGenerationEU, financed from borrowing on the capital markets. For the “core” budget, two amounts for each programme are proposed in the draft budget – commitments and payments. "Commitments" refer to the funding that can be agreed in contracts in a given year, and "payments" to the money actually paid out. All amounts are in current prices.
With a budget of up to €807 billion in current prices, NextGenerationEU helps repair the immediate economic and social damage caused by the coronavirus pandemic and make the EU fit for the future. The instrument helps build a post-COVID-19 EU that is greener, more digital, more resilient and better prepared for the current and forthcoming challenges. The centrepiece of NextGenerationEU is the Recovery and Resilience Facility (RRF) – an instrument for providing grants and loans to support reforms and investments in the EU Member States. The contracts/commitments under NextGenerationEU can be concluded until the end of 2023, the payments linked to the borrowing will follow until the end of 2026.
For More Information
Questions and Answers about the Draft Annual Budget 2026
All EU annual budget documents
Annual budget procedure
Revision of the EU budget 2021-2027
2021-2027 long-term EU budget & NextGenerationEU
Commission 2024-2029 Priorities
EU budget in motion
EU as a borrower
A modernised Cohesion policy: The mid-term review
The EU budget has been able to respond to unprecedented global volatility and has continued to finance our key priorities, both within and outside the Union. At the same time, the room for manoeuvre, as we enter the final two years of the current long-term EU budget is becoming more limited and most flexibilities have been exhausted. I see this also as an important lesson for our next financial framework, for which we will make proposals in July.
Piotr Serafin, Commissioner for Budget, Anti-Fraud and Public Administration
Commission selects 13 Strategic Projects in third countries to secure access to raw materials and to support local value creation
The Commission adopted the first list of 13 Strategic Projects on strategic raw materials located outside of the EU, including in overseas countries or territories. The Strategic Projects will diversify the EU's sources of supply and increase economic security. At the same time, the projects are designed to boost local value creation in third countries.
This initiative complements the list of 47 Strategic Projects in the EU, adopted on 25 March 2025. In total, all 60 Strategic Projects will contribute to the competitiveness of EU's industry and in particular sectors such as electro mobility, renewable energy, defence and aerospace. Those projects are the first results of the implementation of the Critical Raw Materials Act which entered into force in May 2024.
Overview of the selected projects
Among the 13 Strategic Projects, seven are located in Canada, Greenland, Kazakhstan, Norway, Serbia, Ukraine, Zambia, with whom the EU has a strategic partnership on raw materials value chains; two are located in an overseas country or territory, Greenland and New Caledonia; and the remaining ones are located in Brazil, Madagascar, Malawi, South Africa and the United Kingdom.
Ten of these Strategic Projects concern strategic raw materials essential for electric vehicle, batteries and battery storage, like lithium, nickel, cobalt, manganese and graphite. Two Strategic Projects cover the extraction of rare earth elements, which play a key role in producing high-performance magnets used in wind turbines or electric motors for renewable energy technologies and electro mobility. Combined with the three Strategic Projects in the EU that cover the processing of rare earths, these additional Strategic Projects will be able to increase the EU's security of supply of rare earths. Strategic Projects also cover copper, used from power-grid to microelectronics, tungsten, and boron, used in the automotive, renewable energy, aerospace and defence sectors.
Selection process
The selected Strategic Projects were assessed by independent experts to ensure that they meet the criteria established in the Critical Raw Materials Act, notably regarding environmental, social and governance standards as well as technical feasibility. In addition, the projects have to be mutually beneficial and bring benefits both to the EU and to the third countries concerned. The projects had to demonstrate the prospects of contributing to EU supply security, for instance through concluding off-take agreements with European downstream industries.
Benefits for the selected projects
The selected Strategic Projects will benefit from coordinated support by the Commission, Member States and financial institutions in the form of facilitating access to finance and contacts with relevant off-takers. It is estimated that the 13 Strategic Projects outside of the EU need an overall capital investment of €5.5 billion to start operations.
The Commission will also reinforce cooperation with the third countries concerned to ensure the development of those projects, especially through the Strategic Partnerships already concluded with some of these countries on raw materials value chains.
The Critical Raw Materials Act entered into force on 23 May 2024. On the same day, the Commission published a call for submission of proposals for recognition of projects as Strategic Projects with a cut-off date on 22 August 2024. Applications considered complete were assessed by the Commission with the support of external experts to check whether the projects meet relevant criteria. Based on this assessment, the Commission identified a list of projects for the extraction, processing, recycling or substitution of strategic raw materials. The Commission consulted the Critical Raw Materials Board, composed of Member States, and the European Parliament as an observer, to discuss and adopt an opinion on the list of Strategic Projects on 20 February 2025 and on 12 March 2025.
The Commission adopted a decision on a first list of Strategic Projects in the EU on 25 March 2025.
List of Selected Projects in third countries and OTC
Selected Strategic Projects under the Critical Raw Materials Act
Critical Raw Materials Act - European Commission
Interactive map and fiches
Europe needs raw materials to succeed in our industrial and climate ambitions. The EU requires stable, secure and diversified supply chains. After the projects announced in the EU, today’s list of 13 Strategic Projects across the world will help to reduce Europe’s dependencies, contribute to our economic security while creating growth, jobs and export opportunities in the countries concerned.
Securing reliable supplies of critical raw materials is a strategic priority for Europe’s resilience and competitiveness as it is essential for the modernisation of our economy. The EU offer is to link cooperation in this area with skills, quality jobs, access to clean energy and essential services, and with good practices and high standards. This is what the Global Gateway is about, and our projects prove it in action. With this approach, we contribute to prosperity and stability in both Europe and our partner countries, strengthening economic security and diversifying supply chains.
Jozef Síkela, Commissioner for International Partnerships