Less member states failed the in-depth reviews to assess whether they were experiencing macroeconomic imbalances, than in last November of 2015. On the 18 Member States that failed some months ago, European Commission has concluded that 6 are not experiencing imbalances in the framework of the macroeconomic imbalances procedure, while 12 continue to experience either imbalances or excessive imbalances. This change is translated as progress both in addressing those imbalances, reflecting the focus of this year’s European Semester, that is “relaunching investment, implementing structural reforms and pursuing responsible fiscal policies”, as Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue, underlined in Strasbourg.
Dombrovskis also added that Microeconomic reports are of greater detail than before, supporting that “the system of close monitoring is fruitful and can convince us to go further”. “Results are encouraging as it shows that we are making adjustments for the economic stability”, he stressed while describing the very different situation in every one of the 12 Member States. In the measurements to be taken, Dombrovskis did not only include missions, but also political dialogue. The main message as Dombrovskis underlined is that there are always vulnerabilities on the financial sector, and/or deteriorating of competitiveness. “High debt levels are a drag on growth”, he stressed, focusing on the need to drop them down. “It is crucial to address reforms to fight longstanding weaknesses”, he added.
The College of Commissioners discussed both Social Package and the 2016 European Semester Winter Package in Strasbourg, as this is plenary week for the European Parliament, following the publication of the country-specific recommendations at the end of February. As of this year, the European Commission has streamlined the Macroeconomic Imbalance Procedure (MIP) from 6 to 4 categories of macroeconomic imbalances: no imbalances, imbalances, excessive imbalances, and excessive imbalances with corrective action. Greece and Cyprus that yesterday exited the stability support programme, are not covered by 6 European Semester Winter Package. ΜΙΡ is a surveillance mechanism to detect and address economic trends that may adversely affect the proper functioning of a Member State, the euro area, or the EU, aiming to identify potential risks early enough.
The 12 Member States found to experience imbalances, are Bulgaria, Croatia, France, Italy, Portugal, Finland, Germany, Ireland, The Netherlands, Spain, Sweden and Slovenia. The 5 first, Bulgaria, Croatia, France, Italy and Portugal, remain in the “excessive imbalances” category, however their status is not triggering the Excessive Imbalances Procedure. The rest of the countries, Finland, Germany, Ireland, The Netherlands, Spain, Sweden and Slovenia are found to experience imbalances, and as all Member States concerned by imbalances or excessive imbalances, will be subject to specific monitoring. Near the limit we can find Austria and Estonia, which are both subject to in-depth reviews for the first time, but as for Belgium, Hungary, Romania and the UK, the risks have been further reduced. The last 4 countries are to exit Macroeconomic Balances procedure.
“Many Member States are making progress to address structural problems of their economies” stated Dombrovskis, underlining that problems still persist and are a source of vulnerability for several countries, while stressing the need to step up structural reforms. “Member States need to continue their efforts to reduce high public and private debt, address inefficiencies in the labour market, ensure sustainability of social systems and improve the business environment, amongst others”, Dombrovskis added.