The Strategist

EU: French and Italian Economies Are Disbalanced

03/09/2016 - 15:05

EU authorities stated that the economies of France, Italy and Portugal are not balanced and require tighter controls. The European Commission came to such conclusion with results of a study of European economies.

The study is part of a new system set up by the currency unit to prevent another debt crisis in the Eurozone. The system implies regular checks of economic indicators in the region. The study should identify factors that may lead to economic problems in the future.

As noted in the European Commission report, there is a significant imbalance in the economies of Bulgaria and Croatia. The economies of Germany, Ireland, Spain and four other countries revealed less significant problems.

"Different countries have different situations, but in general, the main causes for concern are continued high level of debt, be it public, private or external debt, vulnerability of the financial sector, and loss of competitiveness" - said European Commission Vice President Valdis Dombrovskis.

In particular, according to the European Commission, imbalance in the economy of France caused a large amount of debt and declining competitiveness on a global level. This creates risks for the French economy, and may bear consequences for other countries.

The similar problems are found in the Italian economy, with additional lack of efficiency in the struggle with the "bad" loans problem.

Data on the economic situation in Greece and Cyprus is not included in the European Commission’s report, because these countries are under supervision of individual creditors.

Despite a more favorable situation in Germany, the country's economy will also be supervised by the European Commission. One of the reasons for this is a significant surplus of the balance of payments.

Earlier, German Finance Minister Wolfgang Schaeuble said the country is already solving some of the problems of which the European Commission and other international organizations warned before. According to Schaeuble, wages and public investment in Germany have grown more rapidly than GDP last year.