Major impact on buildings

The European Semester is one of the key tools that the EU devised to avoid national systemic shocks capable of bringing down the euro and the eurozone economy. It works because it has muscle. The European Commission uses a Macroeconomic Imbalance Procedure with a 'scoreboard' of headline and auxiliary indicators (including house price changes) to decide whether a member state is in 'excessive imbalance'. If so, that leads to specific 'recommendations' to the member state on what to do to get back in balance. Eurozone member states that don't comply can be fined 0.1% of their GDP annually.

This has been an opportunity for EPF, because the Semester covers property-crucial policy that the Union has no power to legislate on, such as property taxation, planning law or rent regulation. In recent years, we worked to get EU pressure to reform Danish rent control, Danish limits on shopping centre size and Romanian planning and zoning law, with real success in the latter two cases.

None of this has anything to do with combating climate warming or 'greening' the economy, as none of the indicators touch on this.

But all this is set to change, as the new Commission has vowed to deploy every means at its disposal to reach the EU climate targets, including the European Semester.

The "Annual Growth Survey" that kicks off the Semester is now the Annual Sustainable Growth Strategy and it justifies its name change with a complete ideological shift: the old obsession with balanced budgets is replaced by a vision for the transformation to a sustainable economy.

That action has three pillars:

  1. 'Green' budgetary flexibility;
  2. Matching Semester Country reports with EU funding;
  3. 'Greening' of the Semester country-specific Recommendations.

Both 1) and 2) should have major impact on buildings, recognised in all the Commission literature as carbon problem n° 1. For 1) one can imagine a national deficit deepened by tax cuts and/or subsidies for energy efficiency building renovation. For 2), major EU/national funding for decarbonisation of social housing (more on that in a separate report) or for projects to "organise renovation efforts into larger blocks" or for schools and hospitals (European Green Deal, pp. 9-10)

Full report on all three pillars under epf20-06 of 06.02.2020