Wednesday

26th Apr 2017

EU report: 12 countries at risk of new economic crises

  • Rome managed to water down the wording of the report (Photo: Giampaolo Macorig)

A first report by the EU commission looking at macro-economic data across the bloc up until 2010 warns that 12 countries, including Italy and Spain are at risk of new crises due to their public debt and lack of competitiveness.

Part of legislation strengthening economic surveillance, the "Alert Mechanism Report" published on Tuesday (14 February) singles out Belgium, Bulgaria, Cyprus, Denmark, Finland, France, Italy, Hungary, Slovenia, Spain, Sweden and the UK as in need for further "in depth" scrutiny of their macro-economic policies.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

"If it turns out that imbalances exist and that they are harmful, this new tool is a meaningful step towards correcting the imbalances which built up over the years. Sound fiscal policies and early detection and correction of risky economic imbalances are necessary conditions to return to sustainable growth and jobs," EU economic affairs commissioner Olli Rehn said.

Based on ten indicators such as housing prices, private loans, public deficit and export performance, the report initially singled out Italy, Spain, Hungary and Cyprus as "pressing cases". But in the final version, all 12 countries were put in the same basket, even though housing bubbles and increased private debt in Denmark and Sweden are less of a problem than Rome's high public indebtedness.

According to Il Sole 24 Ore newspaper, Italian Prime Minister Mario Monti, a former EU commissioner, put pressure on the college of commissioners to water down the language of the report ahead of a treasury bonds sale in Rome on Friday.

When asked about the draft version, Rehn said he regretted the leak, but insisted he still stands behind the final version of the document. "This is what I proposed to the college," he said.

An EU official in Brussels told journalists under condition of anonymity that there were "better ideas at some point than what the draft had proposed, and that is what ended up in the final version."

Another official dealing with this dossier admitted that the data is relatively old - as it only goes up until 2010 - but insisted that "this is just a first filter," with the "in depth analysis" to look at fresher data from last year. If member states fail to take these warnings into account, a so-called macro-economic imbalance procedure can be launched, which could lead to the suspension of EU funds from 2014 onwards.

Apart from the old data, the report also does not deal with surpluses, as they are not seen as a potential problem in the bigger EU picture. Rehn explained that for this first exercise, his team focused on deficits and competitiveness laggards, rather than the surpluses and maintained that the German economy performed "relatively well during the crisis." But "structural factors driving surpluses" will be analysed in upcoming reports, he promised.

German Green MEP Sven Giegold however says the commission is turning a blind eye to the surplus countries. "One of the main reasons for the continued difficulties in the eurozone are the imbalances between core and peripheral countries. You can't stabilise the eurozone unless deficit and surplus countries are moving towards each other," he wrote on his website.

Brussels urged to act on housing bubbles

Newcomers to the eurozone who are still playing economic catch-up could in the future suffer the same real estate overheating as Spain and Ireland, a new study by Bruegel, a Brussels-based think-tank has warned.

Opinion

Europe needs to reconcile its two faces

Member states should be made accountable for increasing poverty just like they are accountable for excessive deficits, writes Marije Cornelissen.

Eurogroup makes 'progress' on Greek deal

Eurozone ministers endorsed an agreement in principle between the Greek government and its creditors over a new package of reforms. But talks on fiscal targets and debt could still block a final agreement.

New anti-trust complaint looms over Microsoft

At least three security software companies “met several times” with the European Commission to complain about Microsoft’s alleged abuse of its market position. A formal case could follow.

New anti-trust complaint looms over Microsoft

At least three security software companies “met several times” with the European Commission to complain about Microsoft’s alleged abuse of its market position. A formal case could follow.

Investigation

MEPs oppose EU agency to prevent Dieselgate II

The European Parliament said on Tuesday that there should be more EU oversight on how cars are approved, but stopped short of calling for an independent EU agency.

News in Brief

  1. Hungary's Orban will participate in EU parliament debate
  2. Malta floats cash-for-refugees plan
  3. Ivanka Trump to meet Merkel at Berlin women's conference
  4. Arctic Ocean could be ice-free in 20 years
  5. Nord Stream 2 to get €4.8bn from European energy firms
  6. Defeated Fillon retires from French politics
  7. Hollande: Vote Macron to avoid 'risk' for France
  8. Italy misses deadline on air quality warning

Stakeholders' Highlights

  1. UNICEFRace Against Time to Save Millions of Lives in Yemen
  2. Nordic Council of MinistersDeveloping Independent Russian-Language Media in the Baltic Countries
  3. Swedish EnterprisesReform of the European Electricity Market: Lessons from the Nordics, Brussels 2 May
  4. Malta EU 2017Green Light Given for New EU Regulation to Bolster External Border Checks
  5. Counter BalanceCall for EU Commission to Withdraw Support of Trans-Adriatic Pipeline
  6. ACCAEconomic Confidence at Highest Since 2015
  7. European Federation of Allergy and Airways60%-90% of Your Life Is Spent Indoors. How Does Poor Indoor Air Quality Affect You?
  8. European Gaming and Betting AssociationCJEU Confirms Obligation for a Transparent Licensing Process
  9. Nordic Council of MinistersNordic Region and the US: A Time of Warlike Rhetoric and Militarisation?
  10. European Free AllianceEFA MEPs Vote in Favor of European Parliament's Brexit Mandate
  11. Mission of China to the EUXinhua Insight: China to Open up Like Never Before
  12. World VisionViolence Becomes New Normal for Syrian Children

Latest News

  1. Russische schwarze Kassen bedrohen EU Demokratie
  2. Libya commanders in Brussels for migration talks
  3. Mixed review for EU asylum spots in Greece and Italy
  4. France still anxious over possibility of Le Pen win
  5. Free wifi plan backed by MEP committee
  6. Report: Germany blocks post-Dieselgate reform
  7. Russia suspected of Macron hack
  8. EU to exclude financial services from post-Brexit deal