The European Commission has told 12 EU member states that it is to conduct a further analysis of their economic policies to determine whether they are “risky and harmful” for the entire EU.
Malta is not among these member states as according to the Commission’s analyses Malta’s economy is gaining ground and moving in the right direction.
After presenting his first alert mechanism report on macroeconomic imbalances, Economic Affairs Commissioner Olli Rehn identified Belgium, Bulgaria, Cyprus, Denmark, Finland, France, Italy, Hungary, Slovenia, Spain, Sweden and the UK as potential problem countries, saying that developments in their trade, debt and house price and growth levels could be cause for concern.
Greece, Ireland, Portugal, Romania and Latvia escaped censure because they are currently under or coming out of bailout programmes. “The purpose of this report is not a name and shame exercise,” Mr Rehn said.
“Instead, the objective is to identify and help correct risky and harmful imbalances that have built up in some member states over the years, and help Europe’s economies get back to a stronger footing so they can withstand future economic shocks.”
The report measures countries against 10 indicators - trade balance, investments, exchange rates, exports, wage levels, house prices, private sector credit and debt, government debt and unemployment rates.
Countries that overstep the Commission’s limits – for example where unemployment is more than 10 per cent on average over three years – will be singled out for further study. The report forms part of the EU’s stepped up economic governance, which includes similar monitoring of budgets under the Stability and Growth Pact. Formal warnings will only be issued to countries in May if their policies contribute to market instability or persistently drag down growth levels.
Economic imbalances
Belgium – Failed on trade and debt indicators.
Bulgaria – Trade deficits and wage and credit growth causing concern.
Cyprus – “Wide-ranging challenges,” including high private debt and falling exports.
Denmark – “Very high” private sector debt led by a housing boom.
Finland – Some housing and credit-related problems.
France – one of the “highest contractions in world export market share” in the EU.
Italy – “A significant deterioration in competitiveness” as well as public debt issues.
Hungary – High public debt and large foreign-currency denominated private debts.
Slovenia – Economy “overheated” due to the credit and housing bubble.
Spain – “Very high unemployment” due to “prolonged housing and credit booms”
Sweden – High private savings, low domestic investment and “very strong” house price rises.
UK – High public and private debt and persistently high house prices.