| Author (Corporate) | European Commission |
|---|---|
| Series Title | COM |
| Series Details | (2013) 199 final (10.4.13) |
| Publication Date | 10/04/2013 |
| Content Type | Policy-making, Report |
|
The on-going economic and financial crisis has prompted a profound restructuring of our economies. This needs to be accompanied by a new kind of economic governance in the EU that recognises the interdependence between our economies and which builds the foundations for future growth and competitiveness that will be smart, sustainable and inclusive. Correcting the problems of the past and putting the EU on a more sustainable development path for the future is a shared responsibility of the Member States and the EU Institutions, as our economies are closely intertwined. In the decade leading up to the outbreak of the crisis, not enough attention was paid at the EU level to developments in the economies of individual Member States. This was due in part to an insufficient recognition of the spillover effects of economic policies pursued in one Member State on the economies of other Member States – spillover effects that were particularly acute in the euro area, due to the close economic interdependence of countries sharing a currency. But it was also in part due to the lack of tools at the disposal of the EU to help detect, prevent and where necessary correct such imbalances. As a result, imbalances were allowed to develop unchecked, with negative consequences both for the economies of several Member States and for the proper functioning of the Economic and Monetary Union. Drawing on the lessons of the past and determined to avoid repeating similar situations in the future, the EU has put in place a new system of economic governance. As part of this new way of working, on a proposal of the Commission, the legislator set up a Macroeconomic Imbalances Procedure (MIP) to help detect, prevent and correct problems at an earlier stage (Regulation (EU) No 1176/2011, hereafter ‘the Regulation’). The MIP – together with the reinforced Stability and Growth Pact, with its focus on sustainable public finances – is at the heart of the EU’s strengthened economic governance. While decisive policy action by Member States and at EU-level is helping to rebalance the EU economy and indicators suggest that previous competitiveness losses are gradually being reversed, the imbalances that built up over several years in some EU economies continue to pose daunting challenges. In particular, the need to bring unsustainable levels of public and private debt under control and to get a better balance between income and expenditure is temporarily dampening economic activity and employment. In some cases this situation is exacerbated by the persistence of deep-rooted structural rigidities in some countries' economies, which limit the adjustment capacity and has aggravated the unbearably high levels of unemployment. These factors are recognised in the Commission's 2013 Winter Forecasts which indicate that the return to sustained growth will be gradual. While the situation varies from one Member State to another, continued reform is needed in all of them. Structural reforms take time to support growth and job creation, which in turn would reduce pressures on public finances. That is why a credible medium-term fiscal strategy and a comprehensive set of structural reforms complement each other. The new EU economic governance tools are designed to help governments to pick up underlying problems and to address them without delay, pursuing appropriate and country specific policies within a wider European framework. The EU institutions and Member States are working closely together, recognising the interdependence of the Euro area and of the wider EU which necessitates deeper, shared decision-making. This is the comprehensive approach that underpinned the Commission's 2013 Annual Growth Survey at the start of this third cycle of the European Semester of economic policy coordination. As part of this process in its Alert Mechanism Report, the Commission screened all Member States for possible macroeconomic imbalances on the basis of a scoreboard of indicators as part of the Macroeconomic Imbalances Procedure. The scoreboard has been established by the Commission after consultation with the European Parliament and the Council, as well as the European Systemic Risk Board. These indicators support the economic analysis of the situation of each Member State with regard to internal imbalances (such as private and public debt levels, house prices, unemployment) and external imbalances (such as the current account, international assets and liabilities and competitiveness indicators). As a result, fourteen Member States were selected for further in-depth reviews. The origin, nature and gravity of the imbalances identified by this process differ across Member States and require a country-specific approach. The need for policy action to support significant adjustment is particularly pressing in those Member States that have been experiencing persistent and large current-account deficits and competitiveness losses. In a comprehensive study published in December 2012, the Commission also looked at the reasons for large and persisting current account surpluses. While current account surpluses should be a sign of healthy competitiveness, they can also reflect market failures or a weakness of domestic demand and investment opportunities. The macro-economic imbalances observed in the EU resulted in a misallocation of resources in surplus countries with negative implications for growth. Based on the analysis presented the in-depth reviews accompanying this Communication, the Commission has identified imbalances in all countries selected in the Alert Mechanism Report: Belgium, Bulgaria, Denmark, Spain, France, Italy, Hungary, Malta, the Netherlands, Slovenia, Finland, Sweden and the United Kingdom). Section 2 summarises the broad conclusions that can be drawn from this analysis. Section 3 presents the main findings country by country. Section 4 draws some brief conclusions and outlines the next steps in this process of EU economic governance. |
|
| Source Link | Link to Main Source http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2013:199:FIN |
| Related Links |
|
| Subject Categories | Economic and Financial Affairs |
| Countries / Regions | Europe |
