Brussels, 10/04/2013 (Agence Europe) - On Wednesday 10 April 2013, the European Commission put the spotlight on 13 member states where there are strong economic imbalances, namely Belgium, Bulgaria, Denmark, Spain, France, Italy, Hungary, Malta, the Netherlands, Slovenia, Finland, Sweden and the United Kingdom (see EUROPE 10823), expressing particular concern about Slovenia and Spain. Overall, imbalances within the EU27 and the eurozone are shrinking but challenges differ from one country to the next, explained EU Economic and Monetary Affairs Commissioner Olli Rehn. The Commission expects gaps in growth among member states to continue to grow in the future as a direct result of these imbalances.
Spain and Slovenia get slap on the wrist. The Commission has rung the alarm bell about Spain and Slovenia. In Spain, the economic imbalances are too great, says Rehn, meaning that extra reforms will be required in a number of domains. He welcomed the statement by the Spanish PM, Mariano Rajoy, to come up with a new reform plan by 26 April. The Commission is aware of progress with Spanish reforms, but says more are needed and the existing ones must be introduced at a faster rate. Rehn said unemployment was very high, which means that decisive action is needed to boost growth. The high level of domestic and foreign debt is also a problem.
Slovenia's situation is management, but fast, determined action is needed all the same, said Rehn. The problem is mainly the high level of debt and corporate deleveraging, along with banking and lack of competitiveness. The company has not been able to attract foreign direct investment and political uncertainly in Slovenia has prevented the problems being tackled head-on against the backdrop of deep economic recession.
Too much debt in Italy and France. Italy's public debt is too high for the size of its economy, stated Rehn, particularly given the lack-lustre economic growth and little market confidence. The Italian government altered its forecasts on Wednesday, expecting debt to reach 130.4% of GDP in 2013, up from previous estimates of 126.1%. Rehn said he was optimistic that the excessive deficit proceedings against Italy would soon come to an end. Debt in France is too high and export figures too low. France must clean up public finance, said Rehn, which would have a direct positive impact on the rest of the eurozone, he said.
Berlin could do better. Germany was not covered in the Commission's report, but the Commission says it should do more to boost domestic demand. The Commission recommends structural reforms to open up its services market, get more women onto the labour market and encourage higher pay in line with higher productivity. Progress has, in fact, been made here recently.
Over the next fortnight, member states must send the Commission their reform and stability programmes, which should reflect the recommendations unveiled on 10 April, ahead of publication of country-specific recommendations by the Commission to be published on 29 May. (EL/transl.fl)