E.U. Identifies Problems in Its Members’ Economies
|
Version 0 of 1. BRUSSELS — The European Union’s top economic policy chiefs, invoking new oversight tools, warned Germany, France and 14 other member countries on Wednesday to address problems with their economies. “By virtue of their size in the European economy, Germany and France have a special responsibility to contribute to the recovery in the rest of the euro area,” said José Manuel Barroso, president of the European Commission. The verdicts form part of a series of policy recommendations in 11 areas, from employment to public finances. The goal is to screen all 28 member states for economic risks, known as macroeconomic imbalances, by issuing early warnings under rules that came into force in December 2011. Germany’s trade surplus and France’s public spending were singled out as problem areas. In theory, countries that do not meet their goals could be fined. In practice, the commission has already decided to shy away from full-blown confrontations with member states by making the exercise more of an advisory one. “This looks like a big procedure, but for no country is there any chance of any concrete enforcement action at present,” said Daniel Gros, the director of the Center for European Policy Studies, a research organization in Brussels. “In one way or another, the commission has put a majority of member countries into the review, and when you put everyone in the same boat you reduce the scope for identifying standout cases.” Over all, the European Union has shrunk its average budget deficit by around half since a peak of almost 7 percent of gross domestic product in 2009 and has “created room” for a reduced emphasis on austerity, according to a report issued by the commission. But levels of sovereign and private debt are still too high and member states need to open their product and services markets, the commission said. Member states were also told to offer more training to reduce unemployment, which is likely to remain high in Greece and Spain through next year and to increase in France. To restore lending and rebuild a stable financial sector, Mr. Barroso said, “differences of approach” between European officials and Germany should be overcome to continue building a so-called banking union that could help reduce the chances that indebted lenders threaten the stability of national economies and the euro area. The commission decided to open a further review into serious problems in Spain, noting its high levels of unemployment, and Slovenia, for problems such as weak corporate balance sheets. Both countries were already identified by the commission as having excessive imbalances in April. The other countries under examination, though for less serious levels of imbalances, were Belgium, Bulgaria, Croatia, Denmark, Italy, Hungary, Luxembourg, Malta, the Netherlands, Finland, Sweden and Britain. Britain was identified as having high private sector debt, while Luxembourg was cited for problems including a loss of export market share in its important financial services sector. The commission said it would publish the results of its reviews in the spring, but it did not set a deadline for countries to meet their goals. The commission could recommend financial penalties of up to one-tenth of 1 percent of G.D.P. if countries did not take steps to fix problems. The chance that Germany would ever face such a fine is especially low, since European Union finance ministers agreed in 2011 that large and sustained current-account surpluses did not raise the same issues about the stability of the euro zone that ballooning budget deficits did and would not lead to sanctions. Officials in Brussels are also extremely wary of knocking any nascent economic recovery off course by cracking down too heavily, eroding investor confidence or, at a time of growing disenchantment with the European project, being seen to usurp national policy making. The increasing involvement of the authorities in Brussels in national policy has stirred opposition in some government capitals, in particular in Berlin, making the recommendations on Wednesday a delicate political exercise. But the bureaucratic thicket of rules and procedures, including the need for the commission to issue a series of further warnings before fines are even considered, allows plenty of scope to avoid serious clashes with national capitals. “The in-depth review will be done with an open mind, and there should be no precooked conclusion,” Olli Rehn, the European commissioner for economic and monetary affairs, said at a news conference on Wednesday, referring to the investigation into Germany’s trade surplus. |