12 Countries at Risk of New Economic Crises
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.
Rome managed to water down the wording of the report (Photo: Giampaolo Macorig)
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.
“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.