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Commission concludes in-depth reviews of macroeconomic imbalances in 13 Member States
The Commission has published the findings of in-depth reviews of macroeconomic imbalances in the 13 Member States identified in last November’s Alert Mechanism Report. The in-depth reviews published on 10 April have found that macroeconomic adjustment in Europe is proceeding, though differences in the nature and pace of adjustment exist among Member States. The reviews point to declining current account deficits, convergence in unit labour costs, corrections in excessive housing prices and reductions in private sector indebtedness. In most cases, however, adjustment is not yet complete, and in some cases the weakness of economic activity and the fragile economic outlook may have aggravated both the risks and the cross-country spillovers related to macroeconomic imbalances. In addition, given different challenges and imbalances, cross-country growth differences are expected to persist in the coming years. The macroeconomic imbalances in several Member States need to be closely monitored and require a commitment to structural reform.
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Our transformed economic governance enables us to address macroeconomic imbalances pre-emptively and to create the foundations for sustainable growth.
Olli Rehn, Commission Vice-President for Economic and Monetary Affairs and the Euro. |
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Commission’s Rehn and IMF’s Lagarde review Cyprus reform programme
In a statement issued on 3 April, Olli Rehn, European Commission Vice-President, and Christine Lagarde, Managing Director of the International Monetary Fund, reviewed the multi-annual reform programme put forward by the Cypriot authorities. They noted that the programme builds on steps already taken by Cyprus to address problems in the two largest banks and includes measures aimed at ensuring a stable, sustainable and transparent financial sector. Rehn and Lagarde also said that the programme’s fiscal adjustment balances short-run cyclical concerns and long-run sustainability objectives, while protecting vulnerable groups. Cyprus’ social welfare system will be reviewed to ensure sustainability and fairness.
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Šemeta renews call for more and better action to fight tax evasion
Against the backdrop of Offshore Leaks, the recent exposure of thousands of holders of anonymous wealth from around the world, Algirdas Šemeta, EU Commissioner for Taxation, has renewed calls for more and better action against tax evasion. In a statement issued on 8 April, Šemeta said that the automatic exchange of information should be more widely applied and a tough common stance adopted against tax havens, including sanctions against those who facilitate evaders. He also called for the closing off of opportunities for aggressive tax planning and abusive tax practices. “All the tools to achieve these goals are on the table,” Šemeta said, adding that “Now it is time to put words into action.” The Commission put forward a comprehensive package of measures to fight tax evasion last December.
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Flash estimate: Euro area annual inflation down to 1.7% in March
Euro area annual inflation is expected to be 1.7% in March 2013, down from 1.8% in February, according to a flash estimate released on 3 April by Eurostat, the statistical office of the European Union. Looking at the main components of euro area inflation, the food, alcohol & tobacco category is expected to have the highest annual rate in March (stable at 2.7%), followed by services (1.9% compared with 1.5% in February), energy (1.7% compared with 3.9% in February) and non-energy industrial goods (1.0% compared with 0.8% in February).
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Indebtedness, deleveraging dynamics and macroeconomic adjustment. European Economy. Economic Paper 477.
The current crisis revealed the unsustainability of private sector indebtedness levels in some EU Member States. The deleveraging that is now taking place, while necessary, is also a source of concern, however, as it may dampen economic activity. Against this background, this paper uses indebtedness indicators to identify EU Member States that are currently facing deleveraging pressures in the non-financial private sector and to quantitatively assess those pressures. It also refines the link between the identified deleveraging pressures and the actual adjustment of indebtedness by analysing credit supply and demand conditions in each Member State. Lastly, the paper simulates the impact of a households’ deleveraging and assesses the transmission mechanism through which such a shock influences economic activity. Some policy implications are discussed in the concluding section.
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| Directorate-General for Economic and Financial Affairs |
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