30 May 2012

Following in-depth reviews, Commission calls on Member States to tackle macro-economic imbalances

The reviews conclude that the adjustment of economic imbalances is making progress. This is reflected and witnessed by reductions in current account deficits, convergence in unit labour costs, retrenchment in credit flows or corrections in housing prices. However, in some cases it is not clear to what extent the adjustment is complete and durable, or whether the speed of adjustment is adequate. In many cases, the accumulated internal and external imbalances continue to pose a formidable challenge, for example with regard to private and public sector indebtedness. In this context of ongoing adjustment, in some cases associated with a large stock of accumulated imbalances, the in-depth reviews explored specific challenges faced by the Member States concerned. The results underline the broad variety of the economic situations in Member States and the need for a country-specific approach.

The analysis of the in-depth reviews shows that all the Member States concerned are experiencing imbalances, which need to be addressed under the preventive arm of the Macro-economic Imbalance Procedure.

Belgium is experiencing imbalances, which are not excessive but need to be addressed. In particular, macro-economic developments in the areas of external competitiveness of goods and indebtedness, especially the high level of public debt, deserve further attention so as to reduce the risk of adverse effects on the functioning of the economy.

Bulgaria is experiencing imbalances, which are not excessive but need to be addressed. In particular, the level of external indebtedness as well as certain macro-economic developments related to corporate sector deleveraging and the labour market adjustment process deserve attention to reduce the risk of adverse effects on the functioning of the economy.

Denmark is experiencing imbalances, which are not excessive but need to be addressed. In particular, certain macro-economic developments, notably underlying its external competitiveness and potential risks related to household indebtedness, deserve attention to reduce the risk of adverse effects on the functioning of the economy.

Spain is experiencing very serious imbalances, which are not excessive but need to be urgently addressed. In particular, macro-economic developments, notably related to the significant level of private sector debt, the large negative external position and the financial sector, which were influenced by housing market developments, require close monitoring and urgent economic policy attention in order to avert any adverse effects on the functioning of the economy and of economic and monetary union.

France is experiencing serious imbalances, which are not excessive but need to be addressed. In particular, certain macro-economic developments in the areas of export performance and competitiveness deserve attention so as to reduce the risk of adverse effects on the functioning of the economy.

Italy is experiencing serious imbalances, which are not excessive but need to be addressed. In particular, high public indebtedness and macro-economic developments in the area of export performance deserve attention as Italy has been losing external competitiveness since euro adoption. Given the high level of public debt, enhancing the growth potential should be a key priority so as to reduce the risk of adverse effects on the functioning of the economy.

Cyprus is experiencing very serious imbalances, which are not excessive but need to be urgently addressed. In particular, macro-economic developments as reflected in the current account, public finances and the financial sector require close monitoring and urgent economic policy attention in order to avert any adverse effects on the functioning of the economy and of economic and monetary union.

Hungary is experiencing serious imbalances, which are not excessive but need to be addressed. In particular, certain macro-economic developments such as the highly negative size of the net international investment position and public debt deserve very close attention so as to reduce the important risks of adverse effects on the functioning of the economy. Further to the assessment of effective action, and in line with the provisions of the EU Cohesion Fund regulation, the Commission has also adopted a proposal for a Council decision to lift the March 2012 suspension of the Cohesion Fund commitments.

Slovenia is experiencing serious imbalances, which are not excessive but need to be addressed. In particular, macro-economic developments related to corporate sector deleveraging and banking stability and unfavourable but less pressing development in external competitiveness deserve to be closely monitored, to reduce the important risks of adverse effects on the functioning of the economy.

Finland is experiencing imbalances, which are not excessive but need to be addressed. In particular, macro-economic developments relating to competitiveness deserve attention to reduce the risk of adverse effects on the functioning of the economy.

Sweden is experiencing imbalances, which are not excessive but need to be addressed. In particular, certain macro-economic developments regarding private sector debt and the housing market deserve attention to reduce the risk of adverse effects on the functioning of the economy.

The UK is experiencing imbalances, which are not excessive but need to be addressed. In particular, macro-economic developments in the areas of household debt and the housing market deserve attention, as do unfavourable but less pressing developments in external competitiveness, to reduce the risk of adverse effects on the functioning of the economy.

Press release

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