Malta included in EU’s in-depth review to tackle economic imbalances

The European Commission has launched the second cycle of the Macroeconomic Imbalance Procedure (MIP), which aims to correct and prevent damaging macroeconomic imbalances.

The Commission has suggested more in-depth analysis of developments related to the accumulation and unwinding of macroeconomic imbalances in 14 EU Member States. The countries concerned are: Belgium, Bulgaria, Denmark, Spain, France, Italy, Cyprus, Hungary, Malta, the Netherlands, Slovenia, Finland, Sweden and the United Kingdom.

In the AMR, the Commission identifies Member States whose macroeconomic situation needs further scrutiny through an in-depth review, the outcome of which is not pre-judged. Only after the in-depth reviews next spring will the Commission conclude whether imbalances or excessive imbalances exist, and propose appropriate policy recommendations.

The adjustment underway contains both cyclical and structural elements, though the structural correction appears to predominate in most countries.

The 14 Member States for which the Commission will initiate an in-depth review face different challenges and potential risks. For twelve of them, an in-depth analysis was already carried out in the MIP 2012, and imbalances - of different nature and severity - were found to exist.

These countries received policy guidance through the country-specific recommendations under the European Semester in May. The Commission considers that it is useful to take a closer look again at the risks involved and progress underway in unwinding imbalances in these Member States. In the case of Malta and the Netherlands, it will be the first time that an in-depth review under the MIP is carried out.

Using a scoreboard of eleven macroeconomic indicators that focus on developments in competitiveness, indebtedness, asset prices, adjustment and interlinkages with the financial sector, the Commission will assess the macroeconomic situation by taking due account of country-specific circumstances.

Olli Rehn, Vice-President for Economic and Monetary Affairs and the Euro, said: "The EU is going through a difficult process of unwinding macroeconomic imbalances that built up in the decade before the crisis.

"A lot has already been achieved and reforms are bearing fruit. But the rebalancing process is far from complete and will shape the economic landscape for several years to come.

"Through the Macroeconomic Imbalance Procedure, the Commission provides guidance to Member States to ensure the adoption of adequate policies to tackle imbalances and lay the foundation for sustainable growth and job creation."