REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN CENTRAL BANK AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE Alert Mechanism Report 2016 (prepared in accordance with Articles 3 and 4 of Regulations (EU) No 1176/2011 on the prevention and correction of macroeconomic imbalances)
Date: 2015-11-26
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EU Member State, economic disparity, economic recovery, economic statistics, euro area, macroeconomics, multilateral surveillance, national accounts, public debt

EUROPEAN 
COMMISSION 

Brussels, 26.11.2015  
COM(2015) 691 final 

REPORT FROM THE COMMISSION 

TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN 
CENTRAL BANK AND THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE 

Alert Mechanism Report 2016 

(prepared in accordance with Articles 3 and 4 of Regulations (EU) No 1176/2011 on the 
prevention and correction of macroeconomic imbalances) 

EN 

   EN 

 
 
 
 
  
 
 
 
 
The  Alert  Mechanism  Report  (AMR)  is  the  starting point of  the annual  cycle  of  the  Macroeconomic 
Imbalance  Procedure  (MIP),  which  aims  to  identify  and  address  imbalances  that  hinder  the  smooth 
functioning of the economies of Member States, the economy of the EU, and may jeopardise the proper 
functioning of the economic and monetary union.  

The AMR uses a scoreboard of selected indicators, plus a wider set of auxiliary indicators, to screen 
Member States for potential economic imbalances in need of policy action. Member States identified 
by  the  AMR  are  then  analysed  an  In-Depth  Review  (IDR)  by  the  Commission  to  assess  how 
macroeconomic  risks  in  the  Member  States  are  accumulating  or  winding  down,  and  to  conclude 
whether imbalances, or excessive imbalances exist. Following established practice, for Member States 
for which imbalances were identified in the previous round of IDRs, a new IDR will in any case be 
prepared. 

Taking into account discussions with the Parliament, and within the Council and the Eurogroup, the 
Commission  will  prepare  IDRs  for  the  relevant  Member  States  and  the  findings  will  feed  into  the 
country-specific  recommendations  under  the  'European  Semester'  of  economic  policy  coordination. 
The IDRs are expected to be published in February 2016, ahead of the 'European Semester' package 
of country-specific recommendations. 

1. 

EXECUTIVE SUMMARY 

This Report initiates the fifth annual round of the Macroeconomic Imbalance Procedure 
(MIP)1.  The  procedure  aims  to  identify  imbalances  that  hinder  the  smooth  functioning  of 
Member  State  economies,  of  the  euro  area,  or  of  the  EU  as  a  whole,  and  to  spur  the  right 
policy responses. The implementation of the MIP is embedded in the 'European Semester' of 
economic  policy  coordination  so  as  to  ensure  consistency  with  the  analyses  and 
recommendations made under other economic surveillance tools. The Annual Growth Survey 
(AGS),  which  is  adopted  at  the  same  time  as  this  report,  takes  stock  of  the  economic  and 
social situation in Europe  and sets out broad policy  priorities for the EU as a whole for the 
coming years. 

The report identifies Member States for which further in-depth reviews (IDRs) should 
be undertaken so as to assess whether they are affected by imbalances in need of policy 
action2.  The  AMR  is  a  screening  device  for  economic  imbalances,  published  at  the  start  of 
each annual cycle of economic policy coordination. In particular, it is based on an economic 
reading of a scoreboard of indicators with indicative thresholds, alongside a set of auxiliary 
indicators.  

This  year,  three  employment  indicators,  namely  the  activity  rate,  long-term  and  youth 
unemployment,  are  added  to  the  main  scoreboard.  The  inclusion  of  new  employment 
variables  in  the  scoreboard  is  a  concrete  deliverable  on  the  Commission’s  commitment  to 
strengthen  its  analysis  of  macroeconomic  imbalances.  This  is  particularly  relevant  for  the 
social  consequences  of  the  crisis  and  because  long,  drawn-out  negative  employment  and 
social developments can have a negative impact on potential GDP growth in a variety of ways 
and risk compounding macroeconomic imbalances. This inclusion does not change the focus 
of  the  MIP,  which  remains  aimed  at  preventing  the  emergence  of  harmful  macroeconomic 
imbalances  and  ensuring  their  correction.  Flashes  of  the  new  indicators  do  not  imply  by 

1   This  Report  is  accompanied  by  a  Statistical  Annex  which  contains  a  wealth  of  statistics  which  have 

contributed to inform this report.  

2   See Article 5 of EU Regulation (EU) No 1176/2011. 

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themselves,  an  aggravation  of  the  macro-financial  risks,  and  consequently  are  not  used  to 
trigger any steps in the MIP3.  

As compared with previous issues of the Alert Mechanism Report, a greater emphasis is 
put on euro-area considerations. In line with the 21 October Commission Communication 
"On steps towards Completing Economic and Monetary Union", the Alert Mechanism Report 
aims at a more systematic analysis of the euro-area wide implications of countries' imbalances 
and how such implications require a coordinated approach to policy responses. 

The horizontal analysis presented in the AMR leads to a number of conclusions: 

•  Adjustment to existing imbalances is taking place in a challenging environment. The 
ongoing moderate recovery in the euro area is projected to continue but it remains fragile 
and  subject  to  increased  external  risks.  Over  the  past  few  months,  global  trade  has 
considerably  slowed  down  and  downside  risks,  in  particular  in  relation  to  emerging 
markets' prospects, have increased4. Growth has become more reliant on domestic demand 
sources, in particular a more pronounced recovery in investment. 

•  EU  Member  States  continue  to  progress  in  correcting  their  imbalances.  In  countries 
with  high  external  liabilities,  the  large  and  unsustainable  current  account  deficits  of  the 
pre-crisis  period  have  been  considerably  attenuated  and  external  positions  balanced  or  in 
surplus  would  need  to  be  sustained  in  order  to  significantly  reduce  the  vulnerabilities. 
Furthermore,  cost  competitiveness  developments  have  been  broadly  consistent  with 
external  adjustment  needs,  and  in  most  countries,  the  process  of  balance-sheet  repair  is 
progressing in the different sectors of the economy.  

•  However,  vulnerabilities  associated  with  elevated  levels  of  indebtedness  remain  a 
source of concern.  In  several  Member States,  the  stock of  liabilities, private and public, 
external  and  internal,  remain  at  historically  high  levels.  They  not  only  represent 
vulnerabilities  for  growth,  jobs  and  financial  stability  in  the  EU,  but  the  associated 
deleveraging pressures related to their necessary unwinding also weigh on the recovery.  

•  Surpluses in some Member States remain large over the forecast horizon (2015-2017). 
At the aggregate level, the euro area is posting a current account surplus which is one of 
the world's largest and is expected to rise again this year. While weaker commodity prices 
and  the  depreciation  of  the  euro  exchange  rate  have  contributed  to  boosting  the  trade 
balance, the surplus largely reflects an excess of domestic savings over investment at the 
area level. 

•  After years of markedly divergent patterns, labour market conditions are converging 
but  social  distress  remains  at  unacceptable  levels  in  a  number  of  countries,  notably 
those concerned by the unwinding of macroeconomic imbalances and debt crises. 

3   The indicators are added in order to better capture the employment and social dimension of imbalances and 
adjustment processes. The indicators are the activity rate, the  long-term unemployment rate, and the youth 
unemployment  rate,  all  expressed  as  changes  over  a  three-year  period.    Such  indicators  were  already 
included  among  the  auxiliary  MIP  indicators.  For  details  regarding  the  criteria  for  the  selection  of  the 
indicators see the Commission Staff Working Document "Adding employment indicators to the scoreboard 
of the Macroeconomic Imbalances Procedure to better capture employment and social developments" that 
was discussed in Committees of the ECOFIN and EPSCO Councils and the European Parliament.  

4   See 'European Economic Forecast-Autumn 2015', European Economy, Institutional Paper 011, November 

2015. 

3 

 
 
                                                 
As  identified  in  the  AGS,  a  coordinated  approach  to  macroeconomic  policies  is 
warranted to tackle imbalances while supporting the recovery. Policy action and effective 
reform implementation, in particular in the field of competitiveness but also insolvency, must 
especially  be  stepped  up  in  countries  whose  capacity  to  grow  is  constrained  by  elevated 
deleveraging  pressures  or  structural  growth  bottlenecks.  In  parallel,  domestic  demand  and 
investment  needs  to  be  boosted  particularly  in  countries  with  fiscal  space,  a  large  current 
account  surplus  or  low  deleveraging  pressures.  In  light  of  the  interconnection  between 
Member States, this combination of policies would contribute to put the rebalancing process 
on a more stable footing by making it more symmetric, while making the recovery more self-
sustainable. 

More detailed and encompassing analyses for Member States flagged by the AMR will 
be performed in in-depth reviews (IDRs). As in the previous cycle, IDRs will be embedded 
in Country Reports, which also integrate the additional Commission services analysis on other 
structural  issues  necessary  to  inform  the  EU  Semester  Country  Specific  Recommendations 
(CSRs). To prepare the IDRs, the Commission will base its analysis on a much richer set of 
data and information: all pertinent statistics, all relevant data, all material facts will be taken 
into  account.  As  established  by  the  legislation,  it  is  on  the  basis  of  the  IDRs  that  the 
Commission  will  conclude  whether  imbalances  or  excessive  imbalances  exist,  and 
subsequently prepare the appropriate policy recommendations for each Member State5. 

Based on the economic reading of the MIP scoreboard, the Commission finds that IDRs 
are  warranted  for  the  following  Member  States  in  order  to  examine  in  further  detail  the 
accumulation and unwinding of imbalances, and their related risks6.  

•  For most countries, IDRs are needed because imbalances were identified in the previous 
round  of  IDRs7.  Following  established  practice,  a  new  IDR  is  needed  to  assess  whether 
existing  excessive  imbalances  or  imbalances  are  unwinding,  persisting  or  aggravating, 
while  paying  due  attention  to  the  contribution  of  the  policies  implemented  by  these 
Member  States  to  overcome  imbalances.  The  Member  States  concerned  are  Belgium, 
Bulgaria,  Germany,  France,  Croatia,  Italy,  Hungary,  Ireland,  the  Netherlands, 
Portugal, Romania, Spain, Slovenia, Finland, Sweden and the United Kingdom.  

•  IDRs  will  be  prepared  for  the  first  time  also  for  Estonia  and  Austria.  In  the  case  of 
Estonia, the IDR will assess the risks and vulnerabilities linked to a renewed build-up of 
demand pressures. In the case of Austria, issues related to the financial sector, notably its 
high  exposure  to  developments  abroad  and  the  impact  on  credit  provided  to  the  private 
sector will be analysed. 

For  the  Member  States  that  benefit  from  financial  assistance,  the  surveillance  of  their 
imbalances  and  monitoring  of  corrective  measures  take  place  in  the  context  of  their 

5   Regulation (EU) No 1176/2011 (OJ L 306, 23.11.2011, p. 25). 
6   The increase in the number of Member States selected for an IDR since 2012 is partly a reflection of the 
need to integrate countries exiting a financial assistance programme as a result of economic improvement. 
This concerns Ireland, Portugal and Romania whose inclusion in the MIP surveillance was deemed prudent. 
In addition, Croatia joined the standard surveillance after acceding to the EU in 2013. The persistence of a 
certain number of Member States subject to an IDR is linked to the fact that Member States can exit MIP 
surveillance  only  on  the  basis  of  a  new  IDR  Looking  ahead,  if  economic  conditions  improve  or  do  not 
worsen, one may expect the number of countries subject to an IDR to fall over time. 

7   See 

'2015  European  Semester:  Assessment  of  growth  challenges,  prevention  and  correction  of 
macroeconomic  imbalances,  and  results  of  in-depth  reviews  under  Regulation  (EU)  No  1176/2011'  - 
COM(2015) 85 final -, 26.2.2015, and 'Macroeconomic Imbalances, Main Findings of the In-Depth Reviews 
2015'  European  Economy-Occasional  Papers  228.  For  the  full  set  of  country-specific  recommendations 
adopted by the Council, including those that are MIP-relevant, see OJ C272, 18.8.2015. 

4 

 
 
                                                 
assistance programmes. This concerns Greece and Cyprus. As was the case in the previous 
cycles for Member States expected to exit their financial assistance programme, the situation 
of  Cyprus  will  be  assessed  in  the  context  of  the  MIP  only  after  the  on-going  financial 
assistance programme, which is expected to finish by March 2016.  

For  the  other  Member  States,  the  Commission  will  not  at  this  stage  carry  out  further 
analyses in the context of the MIP. On the basis of the economic reading of the scoreboard, 
the Commission is of the view that for the Czech Republic, Denmark, Latvia, Lithuania, 
Luxembourg, Malta, Poland and Slovakia, an In-Depth Review is not needed at this stage 
and that further MIP surveillance is not warranted. However, careful surveillance and policy 
coordination are necessary on a continuous basis for all Member States to identify emerging 
risks and put forward the policies that contribute to growth and jobs. 

Box 1. Stabilising and streamlining MIP imbalance categories 

The configuration of MIP imbalance categories evolved over time and currently it appears as follows: 

1. No imbalance 

2. Imbalances, which require monitoring and policy action 

3. Imbalances, which require monitoring and decisive policy action 

4. Imbalances, which require specific monitoring and decisive policy action 

5. Excessive imbalances, which require specific monitoring and decisive policy action 

6. Excessive imbalances, leading to the Excessive Imbalance Procedure 

The Excessive Imbalances Procedure (EIP) has not been invoked yet. The identification of excessive 
imbalances, however, implies the requirement of decisive policy action and specific monitoring. Since 
2014,  some  euro-area  countries  of  systemic  relevance  identified  with  imbalances  were  required 
decisive  policy  action  and  specific  monitoring,  with  a  view  of  ensuring  progress  with  the  euro-area 
CSR addressing macroeconomic imbalances. Some countries with imbalances were required decisive 
policy action.  

While the fine-tuning of the categorisation of MIP imbalances has permitted to articulate the activation 
of MIP surveillance, the resulting complexity did not help in terms of transparency and enforceability. 
For this reason, the Communication of 21 October puts forward a number of avenues for improving 
the  implementation  of  the  MIP  looking forward.  Notably,  the  Commission  will  ensure  a  transparent 
implementation of the MIP, stabilise the categories and clarify the criteria guiding its decision.  

5 

 
 
 
 
2. 

IMBALANCES, RISKS AND ADJUSTMENT: ISSUES OF A CROSS-COUNTRY NATURE 

In  a  context  of  uncertain  global  conditions,  the  economic  recovery  is  becoming 
increasingly  reliant  on  domestic  demand.  The  latest  economic  forecasts  confirm  that  a 
moderate  recovery  is  taking  place  across  the  EU  in  a  context  of  low  oil  prices  and  very 
accommodative monetary policy. In 2015 and 2016, economic activity in the EU is expected 
to grow at 1.9 and 2.0 per cent, after having posted 1.4 per cent growth in 2014. In the euro 
area, real GDP growth rates correspond to 0.9, 1.6 and 1.8 per cent in 2014, 2015 and 2016, 
respectively8.  Although  consumption  has  recently  strengthened,  domestic  demand  remains 
subdued partly in light of significant deleveraging pressures in several Member States. This is 
reflected  in  low  inflation  and  the  growth  of  the  euro-area  current  account  surplus,  which  is 
expected to rise again in 2015, also against a backdrop of declining oil prices since mid-2014 
and the lower euro exchange rate. Since the summer, a marked slowdown in external demand 
has  been  taking  place  while  downside  risks  to  the  global  economy  are  growing  in  light  of 
geopolitical  factors  and  the  possibility  of  a  sharper  than  expected  slowdown  in  China  and 
other  emerging  countries9.  Depending  on  the  magnitude  of  the  global  slowdown,  EU 
economies  could  be  significantly  affected,  reinforcing 
the  need  for  consolidating 
competitiveness improvements, but also making domestic demand vital to the recovery.  

In  this  context,  macroeconomic  imbalances  continue  to  adjust  but  elevated  levels  of 
indebtedness  represent  important  vulnerabilities.  EU  economies  continue  to  progress  in 
correcting  their  external  and  internal  imbalances.  High  and  unsustainable  current  account 
deficits have been reduced and the process of balance-sheet repair is progressing in all sectors 
in most countries. Furthermore, cost competitiveness developments are in general consistent 
with  external  adjustment  needs.  However,  serious  vulnerabilities  related  to  the  stocks  of 
liabilities and the quality of the adjustment persist. The stock of liabilities, private and public, 
external and internal, remains at historically high levels in several Member States. They not 
only  represent  vulnerabilities  for  growth,  jobs  and  financial  stability  in  the  EU,  but  the 
simultaneous  deleveraging pressures  related to  their necessary  unwinding also weigh on the 
recovery. In addition, the persistence of sizeable current account surpluses in countries with 
relatively low deleveraging needs implies large savings and investment imbalances, pointing 
to a misallocation of resources which increases the risk of prolonged economic weakness and 
which may complicate the deleveraging process in the EU at large.  

Overcoming the high levels of debt while making room for the recovery to become more 
self-sustainable represents the main challenge for the euro area at the current juncture. 
At the euro area aggregate level, the risk of protracted anaemic growth and low inflation must 
be mitigated by countries that are better placed to boost investment consistently with available 
fiscal  space  and  low  deleveraging  needs.  In  parallel,  structural  reforms  aimed  at  unlocking 
growth  potential  must  continue  or  be  stepped  up  especially  in  countries  whose  growth 
potential is limited by structural growth bottlenecks. Moreover, countries whose capacity to 
boost  demand  is  constrained  by  high  deleveraging  pressures  should  also  focus  on  growth 
enhancing reforms, ensuring also that their insolvency framework is adequate to address the 
stock  of  non-viable  debt,  free  up  economic  resources  accordingly  and  reallocate  capital 
efficiently. (Box 2)  

8   See 'European Economic Forecast-Autumn 2015', European Economy, Institutional Paper 011, November 
2015. Although aggregate figures of the recovery mask significant differences across Member States, real 
convergence seems now to progress with higher growth rates recorded in Spain, Ireland, Slovenia, the Baltic 
states, but also Hungary, Poland, Czech Republic, Romania while growth in France, Italy, Austria, Finland, 
Belgium is likely to remain subpar in 2015. 

9   See International Monetary Fund. 2015. World Economic Outlook: Adjusting to Lower Commodity Prices. 

Washington (October). 

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Box 2: The euro-area dimension of macroeconomic imbalances 

Euro-area wide implications of macroeconomic imbalances deserve careful consideration. In line 
with proposals contained in the 22 June 2015 Report "Completing Europe's Economic and Monetary 
Union" by Jean Claude Juncker, Donald Tusk, Jeroen Dijsselbloem, Mario Draghi and Martin Schulz, 
and the 21 October 2015 Commission Communication "On steps towards completing Economic and 
Monetary Union", starting from this year the AMR contains a more systematic analysis of the euro-
area  wide  implications  of  countries'  imbalances  and  how  such  implications  require  a  coordinated 
approach to policy responses. 

The euro area is currently posting one of the world's largest current account surpluses in value 
terms. In 2015, it is expected to amount to approximately EUR 390bn, or 3.7% of GDP. The bulk of 
the surplus is accounted for by Germany and the Netherlands, whose contribution represents 2.5% and 
0.7%  of  the  euro  area  GDP  respectively,  and  by  Italy  (0.4%  of  euro  area  GDP).  (Graph  1)  Former 
deficit  countries  are  now  also  recording  balanced  or  surplus  positions,  which  are  needed  in  order  to 
ensure  the  sustainability  of  their  external  positions.  In  a  context  of  low  growth  and  nearly  zero 
inflation,  the  persistence  of  very  high  surpluses  in  countries  with  relatively  low  deleveraging  needs 
points  to  a  lack  of  domestic  sources  of  growth.  Once  oil  prices  rise  again,  domestic  demand 
strengthens,  the  effect  of  the  lower  euro  fades  away  and  export  growth  slows,  the  trade  balance 
surpluses of the euro area and the EU should stop widening and eventually decline slightly in 2017. 
The continuous accumulation of net foreign assets may also imply growing exposure to exchange rate 
risk and reduced room for national authorities to manage macro-financial risks (e.g. via prudential or 
regulatory  measures)  as  the  share  of  assets  in  domestic  portfolios  originating  in  foreign  countries 
grows larger.  

Simultaneous  deleveraging  pressures  are  currently  at  play  in  all  sectors  of  the  economy 
(households,  corporates,  government).  At  the  euro  area  aggregate  level,  households,  corporations 
and  governments  are  currently  struggling  with  elevated  levels  of  indebtedness,  and  the  necessary 
process  of  deleveraging  implies  subdued  investment  and  consumption  dynamics.  According  to 
Eurostat data, in 2014, debt stocks in consolidated terms represented 59.7% and 79.5% of euro area 
GDP  for  households  and  non-financial  corporations,  while  they  amounted  to  63.1%  and  81.9%  of 
GDP respectively in 2009. The aggregates hide wide disparities across Member States. Private sector 
deleveraging started early on, when the crisis broke out, but the process is still ongoing10. Households 
are  still  exhibiting  a  net  lending  position  that  is  twice  as  high  as  its  pre-crisis  level.  Corporations, 
which  often  record  net  borrowing  needs  in  normal  times,  are  still  posting  a  positive  net  lending 
position. Government deleveraging started later, as the first phase of the recession prompted stimulus 
packages in  2009-2010. Since then, governments have entered  a  consolidation phase,  and budgetary 
policy has remained tight or, more recently, broadly neutral. The demand impact of the deleveraging 
processes by households and corporations has therefore been compounded by the need to contain the 
rise in debt in the government sector11.  

The  level  of  the  euro  area  current  account  surplus  is  likely  to  be  above  what  fundamental 
characteristics  imply,  reflecting  economic  inefficiencies  and  subdued  domestic  demand.  A 
number  of  economic  characteristics  such  as  the  ageing  profile  of  the  population,  the  old-age 
dependency  ratio,  the  relatively  high levels  of  income  per  capita  but  also  the  status  of  the  euro  as  a 
reserve currency suggest that the appropriate overall saving-investment balance in the euro area should 
be broadly balanced12. However, the increase in the euro area current account surplus over the past few 

10   Deleveraging process can be evidenced by looking at the aggregate net lending position of the euro area by 
sectors.  In  2014,  it  amounted  to  3.2%  of  GDP,  of  which  households,  corporations  and  government 
represented  2.9%,  1.8%  and  -2.6%.  In  2010,  the  respective  figures  amounted  to  0.6%,  2.9%,  3.3%  and  -
6.2%, and in 2007, to 0.3%, 1.4%, -0.6% and -0.6%. 

11   See  Bricongne  J.-C.  and  Mordonu  A.  (2015),  'Interlinkages  between  household  and  corporate  debt  in 

advanced economies', European Commission Discussion Papers N° 17 (October 2015). 

12   The  benchmark  is  derived  from  reduced-form  regressions  capturing  the  main  determinants  of  the  saving-
investment  balance,  including  fundamental  determinants  (e.g.  demography,  resources),  policy  factors  and 

7 

 
 
 
 
                                                 
 
years has led to a position that is higher than the surplus implied by economic fundamentals. Despite 
recent improvements and notwithstanding the temporary effects of lower oil prices and exchange rate 
developments, the absence of robust credit growth in the euro area as a result of balance sheet redress 
and  sizeable  deleveraging  pressures  partly  explains  the  difference.  Looking  forward,  policies  put  in 
place  at  the  EU  level  (e.g.  the  ECB's  Public  Sector  Purchase  Programme  and  the  Investment  Plan 
launched  by  the  Commission)  are  meant  to  support  credit  for  investment  and  consumption,  even 
though the effect on the real economy might take some time to materialise.  

Cross-border spillovers within the euro area warrant a coordinated approach to macroeconomic 
policies to tackle imbalances while supporting the recovery. In light of the interconnection among 
euro  area  economies  through  trade,  financial  and  institutional  linkages,  a  coordinated  approach  to 
macroeconomic  policies  is  warranted  to  accelerate  the  correction  of  imbalances  while  supporting 
growth. Moreover, confidence effects have also proven to be an important transmission mechanism13. 
In particular, spillovers arising from the policy stance in large countries are of systemic relevance for 
the euro area at the current juncture.  

The risk of protracted low growth and low inflation at euro-area level should be mitigated especially 
by  countries  that  are  better  placed  to  boost  investment  consistently  with  available  fiscal  space  and 
positive savings investment balance14. This is the case of Germany and the Netherlands whose current 
account  surpluses  are  forecast  to  remain  high  in  the  coming  years.  A  reduction  of  surpluses  in 
countries with relatively low deleveraging needs would bring a much needed improvement in demand 
in  the  euro  area  and  help  ease  the  trade-off  faced  by  highly  indebted  countries,  which  need  to 
deleverage and boost growth simultaneously.  

In parallel, structural reforms aimed at unlocking growth potential must continue or be stepped up, in 
particular in countries of systemic relevance like Italy and France. Such reforms would help not only 
to  remove  growth  bottlenecks,  but  they  would  also  contribute  to  support  confidence  on  the 
sustainability of fiscal imbalances in these countries.  

Finally, countries whose capacity to sustain demand is constrained by debt overhang and a high level 
of  non-performing  loans  should  also  focus  on  growth  enhancing  reforms,  ensuring    that  their 
insolvency frameworks are also adequate to address the stocks of non-viable debt, free up economic 
resources, and reallocate capital efficiently.   

global financial conditions. The methodology is akin to the External Balance Assessment (EBA) approach 
developed  by  the  IMF.  See  Phillips,  S.  et  al.  (2013),  'The  External  Balance  Assessment  (EBA) 
Methodology', IMF Working Paper, 13/272. 

13   See D’Auria, F., Linden, S., Monteiro, D., in ‘t Veld, J. and Zeugner S., 'Cross-border Spillovers in the Euro 

Area', Quarterly Report on the Euro Area, Vol 13 No 4 (2014). 

14   Cf.  Recital  17  of  Regulation  1176/2011:  "When  assessing  macroeconomic  imbalances,  account  should  be 
taken of their severity and their potential negative economic and financial spill-over effects which aggravate 
the  vulnerability  of  the  Union  economy  and  are  a  threat  to  the  smooth  functioning  of  the  economic  and 
monetary  union.  Actions  to  address  macroeconomic  imbalances  and  divergences  in  competitiveness  are 
required in all Member States, particularly in the euro area. However, the nature, importance and urgency of 
the  policy  challenges  may  differ  significantly  depending  on  the  Member  States  concerned.  Given 
vulnerabilities  and  the  magnitude  of  the  adjustment  required,  the  need  for  policy  action  is  particularly 
pressing  in  Member  States  showing  persistently  large  current-account  deficits  and  competitiveness  losses. 
Furthermore,  in  Member  States  that  accumulate  large  current-account  surpluses,  policies  should  aim  to 
identify and implement measures that help strengthen their domestic demand and growth potential."   

8 

 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                                                                         
Graph 1: The euro area current account balance 

P
D
G

f
o
%

4

3

2

1

0

-1

-2

-3

-4

99

00

01

02

03

04

05

06

07

08

09

10

11

12

13

14

15

16

DE

NL

ES

FR

IT

Other

Euro Area

Source: National accounts and European Commission Autumn forecasts 2015 (AMECO) 

Large current account deficits have adjusted to more balanced positions or surpluses in 
most  Member  States,  while  large  current  account  surpluses  still  persist.  In  2014,  the 
majority of Member States registered current account surpluses. Euro area countries most hit 
by the crisis have undertaken a sharp adjustment and are now registering moderate surpluses 
(Spain,  Portugal,  Italy)  or  somewhat  larger  surpluses  (Ireland,  Slovenia).  While  the  initial 
adjustment  was  mainly  the  result  of  reduced  private  domestic  demand,  the  recent  surpluses 
have also been achieved through export growth15. However, cyclically-adjusted figures are in 
general lower than the headline balances (Spain, Italy, Portugal, Greece, Cyprus), suggesting 
that  further  increases  in  current  account  are  not  to  be  expected  as  the  recovery  brings  back 
output close to potential, even though risks of going back to pre-crisis deficits seem limited. A 
few  Member  States  registered  relatively  contained  current  account  deficits  like  Finland  and 
France while deficits were much wider in the United Kingdom and Cyprus. Overall, the three-
year  average  indicator  exceeds  the  threshold  in  four  surplus  countries  (Germany,  Denmark, 
the  Netherlands  and  Sweden)  and  two  deficit  countries  (the  United  Kingdom  and  Cyprus). 
Countries such as Germany, the Netherlands, as well as non-euro area Member States such as 
Sweden  and  Denmark  continue  to  post  very  high  surpluses.  These  large  and  persistent 
surpluses show no tendency to correct. While current account surpluses in countries with an 
ageing  population  like  Germany  are  to  be  expected,  and  recent  oil  price  and  exchange  rate 
developments had a favourable impact on the trade balance, the current value of the surplus 
appears well above what economic fundamentals would imply16. 
In the case of Germany, when allowing for the position in the business cycle, the cyclically-
adjusted surplus is higher than the headline figure17.  

15   See Box I.3 in 'European Economic Forecast-Spring 2015', European Economy, 2015(2).  
16   See  'Macroeconomic  Imbalances,  Main  Findings  of  the  In-Depth  Reviews  2015'  European  Economy-

Occasional Papers 228. 

17   Given  the  reduction  in  current  account  deficits,  the  geographic  composition  of  the  surpluses  in  creditor 
economies,  particularly  Germany,  has  changed.  The  balance  vis-à-vis  the  rest  of  the  world  has  increased, 
while the balance vis-à-vis the euro area has declined. The latter has been driven mainly by a reduction in 
exports to the rest of the euro area, rather than an increase in imports by Germany. 

9 

 
 
 
 
 
 
 
 
 
 
 
                                                 
Graph 2: Net International Investment Position and Net External Debt in 2014 

150

In % of GDP

Net external debt (neg. sign)

Other net assets

Net international investment
position (NIIP)

100

50

0

-50

-100

-150

CY EL PT IE* ES SK LV LT SI EE IT FR FI AT LU* MT* DE BE NL HR HU BG PL RO CZ UK SE DK

Euro Area

Non-Euro Area

Source: Eurostat (BPM6, ESA10) 
Note: Data for the net external debt are unavailable for Croatia and the United Kingdom. The decomposition is 
not fully displayed for Ireland, Luxembourg and Malta18. 

Vulnerabilities persist as the adjustment in external flows has not yet translated into a 
sizeable  reduction  in  external  indebtedness  (Graph  2).  Overall,  sizeable  vulnerabilities 
persist among net debtor countries: in 2014, the scoreboard indicator for the net international 
investment  position  exceeds  the  indicative  threshold  in  16  Member  States.  Since  the 
emergence  of  current  account  surpluses  over  the  past  few  years,  net  external  liabilities 
expressed as a percentage of GDP have not significantly improved in euro area countries such 
as Greece, Spain, or Portugal. In particular, with the exception of Ireland and, more recently, 
Portugal, the contribution of nominal GDP growth has been either small (Spain) or negative 
(Greece and Cyprus). This highlights the risks linked to a low inflation environment and how 
it  can  hamper  the  correction  of  imbalances.  Negative  valuation  effects  have  also  weighed  – 
sometimes  significantly  –  on  the  improvement  of  net  external  liabilities,  notably  in  Greece, 
Spain  and  Portugal.  The  absence  of  significant improvement  is  also  observed  in  Croatia.  In 
the majority of the economies with highly negative positions, higher current account surpluses 
than those currently observed would be needed in order to reduce their net external liabilities 
in a timely fashion (Graph 3). Consolidating improvements in export competitiveness remains 
therefore essential, as well as policies aimed at attracting foreign direct investments (FDI). In 
Ireland and a number of Eastern European countries (Hungary, Poland, Romania), the current 
account balances that are currently recorded need to be maintained for a protracted period of 
time  in  order  to  lead  to  a  significant  improvement  in  the  net  external  liabilities  over  the 
medium term. In net creditor countries such as Germany and the Netherlands, risks associated 
with  growing  stocks  of  net  foreign  assets  cannot  be  compared  with  external  sustainability 
risks.  Nonetheless,  the  fast  and  continuous  accumulation  of  net  creditor  risks  should  not  be 
overlooked.  

18   For these countries, the major share of external liabilities is not linked to domestic capital and activities, but 
rather to external assets. For instance, much of the Irish external liabilities are dominated by mutual funds 
that  reside  in  Ireland  but  whose  assets  stem  from  other  countries.  According  to  the  Balance  of  Payments 
classification, the balance sheet of mutual funds is composed by equity liabilities matched by portfolio debt 
assets, which translates into a very negative equity position along a very positive marketable debt position. 

10 

 
 
 
   
 
 
 
 
                                                 
Graph 3: Current account: cyclically-adjusted balances and balances required to stabilise or reduce 
external liabilities 

Cyclically adjusted current account in 2014

Current account balance in 2014

Current account required to stabilise NIIP over 2015-2016

Current account required for the NIIP to reach -35% by 2024

12

10

8

6

4

2

0

-2

-4

-6

-8

-10

CY EL FI FR SK ES PT LV IT BE AT EE IE LU SI LT MT DE NL UK CZ PL RO HR BG HU DK SE

Euro Area

Non-Euro Area

Source: Current account is displayed in the national accounts concept. Commission services calculations. 
Notes:  Cyclically-adjusted  balances  are  calculated  using  the  output  gap  estimates  underlying  the  Commission 
Autumn Forecasts 201519. Current account balances required to stabilise or reduce net external liabilities rest on 
the  following  assumptions:  nominal  GDP  projections  stem  from  the  Commission  Autumn  Forecasts  (up  to 
2017),  and  the  Commission T+10  methodology projections beyond  that20;  valuation  effects  are  conventionally 
assumed to be zero in the projection period, which corresponds to an unbiased projection for asset prices; capital 
account  balances  are  assumed  to  remain  constant  as  a  percentage  of  GDP,  at  a  level  that  corresponds  to  the 
median over 2014 and projections for 2015-201721. 

Cost  competitiveness  developments  have  been  broadly  consistent  with  external 
adjustment  needs.  (Graph  4)  In  2014,  declines  of  unit  labour  costs  were  recorded  in  a 
number  of  euro  area  countries  that  were  particularly  affected  by  the  crisis  (e.g.  Cyprus, 
Greece,  Spain,  Slovenia,  Portugal  and  Ireland).  In  Cyprus,  Greece  and  Portugal,  the 
adjustment  is  mainly  the  reflection  of  wage  moderation  while  in  Spain  and  Ireland, 
productivity  gains  appear  to  account  for  a  large  share  of  the  decline  in  unit  labour  costs 
(ULC). In addition, in countries where the labour market is improving, hours worked started 
to  contribute  positively  to  the  evolution  of  unit  labour  costs  (Spain,  Portugal  and  Ireland). 
Conversely, in Italy and France, unit labour costs grew at a pace that was higher than the euro 
area  average  (1.1%),  and  Germany  and  Austria  registered  increases  near  2%,  mainly  on 
account of wage dynamics while in the case of Italy, sluggish productivity also played a role. 
The  fastest  increases  were  recorded  in  the  Baltic  states,  owing  to  sharp  increases  in  hourly 
wages.  Overall,  taking  into  account  developments  over  the  past  three  years,  the  unit  labour 
costs  indicator  exceeds  the  threshold  in  Estonia,  Latvia  and  Bulgaria.  The  downward 
adjustment  in  unit  labour  costs  in  Member  States  facing  higher  adjustment  needs  was 
followed by a more muted though still visible relative decline in the real effective exchange 
rate, suggesting some responsiveness of price-cost margins to weak economic conditions. As 

19   The estimates of the cyclically-adjusted balances are based on the methodology described in Salto, M. and 
A. Turrini (2010), 'Comparing Alternative Methodologies for Real Exchange Rate Assessment', European 
Economy-Economic Papers, 427. 

20   For the T+10 methodology, see Havik, K., K. Mc Morrow, F. Orlandi, C. Planas, R. Raciborski, W. Röger, 
A.  Rossi,  A.  Thum-Thysen,  and  V.  Vandermeulen  (2014),  'The  Production  Function  Methodology  for 
Calculating Potential Growth Rates & Output Gaps', European Economic Papers 535. 

21   For a detailed presentation of the calculations and assumptions, see, Loublier, A., Turrini A. and Zeugner, S. 
(2015), 'Methodologies for  computing current account benchmarks', European Economy Economic Paper 
forthcoming. 

11 

 
 
 
 
 
                                                 
a result of these relatively contained developments, no flashes are observed for the indicator, 
with the exception of Greece.  

Graph 4: Decomposition of ULC growth in 2014  

Of which: labour productivity (neg. sign) - contribution of total factor productivity
and capital accumulation
Of which: labour productivity (neg. sign) - contribution of hours worked

Of which: real hourly compensation per employee

Of which: inflation (GDP deflator growth)

ULC growth in 2014

10%

8%

6%

4%

2%

0%

-2%

-4%

-6%

-8%

Y
C

L
E

E S

I

I

S
E

T
P

E
B

K
S

L
N

I
F

T
M

9
1
A
E

Euro Area

T
I

U
L

R
F

E
D

T
A

T
L

E
E

V
L

R
H

K
U

L
P

Z
C

O
R

G
B

E
S

K
D

U
H

Non-Euro Area

Source: AMECO and MIP scoreboard. Commission services calculations 
Notes:  The  decomposition  is  based  on  the  standard  breakdown  of  ULC  growth  into  inflation,  real  hourly 
compensations  and  labour  productivity,  the  latter  being  further  broken  down  into  the  contribution  of  hours 
worked, total factor productivity and capital accumulation using a standard growth accounting framework.  

The  scoreboard  still  records  cumulated  export  market  share  losses  breaching  the 
indicative threshold in several Member States, but improvements start being visible. The 
indicator  on  export  market  share  changes  over  a  five-year  period  shows  cumulated  losses 
above threshold in 18 Member States, suggesting that the aggregate current account surplus 
observed in the euro area is not mainly linked to a strong export performance (Graph 5a)22. 
However, the further decline in export market shares observed in EU economies over the past 
few years seems to have come to a halt with annual gains observed in 2013 and 2014 in the 
majority of Member States, with Finland, Sweden and Malta being exceptions (Graph 5b). In 
2014, gains were in some cases relatively contained (Austria, France, the Netherlands, Spain, 
Italy)  or  in  other  cases  more  significant  (Belgium,  Germany,  Hungary,  Romania,  Greece, 
Ireland). Nevertheless, these gains are in general of a much lower magnitude than the drops 
registered  in  2010-2012.  The  recent  improvement  in  export  market  shares  in  the  EU  is 
partially due to the fact that the global trade came to a halt in 2013-2014, which mechanically 
attenuated export market shares losses. In this respect, the recent market share improvements 
may not be structural. Looking forward, it is too early to assess whether these gains represent 
a permanent shift or are just temporary. 

22   Exports in value from the euro area have decelerated between 2013 and 2015, and exports towards non-EU 

countries have roughly flattened. 

12 

 
 
 
  
 
 
                                                 
Graph 5a: Five-year change in export market 
shares - Scoreboard indicator in 2014 

Graph 5b: Two-year change in export market 
shares in 2014 

50

40

30

20

10

0

-10

-20

-30

-40

Gains within Extra-EU market

Gains within EU market

Exposure to Extra-EU

Exposure to EU

Scoreboard indicator 2014 (5 year change)

Gains within Extra-EU market
Gains within EU market
Exposure to Extra-EU
Exposure to EU
Cumulated change in 2013 and 2014

25

20

15

10

5

0

-5

-10

I

YF
C

T
M

R
H

L
E

K
D

T
A

U
H

T

I

I

RS
F

S
E

L
N

E
B

E
S

K
U

E
D

E

I

Z
C

T
P

K
S

L
P

G
B

V
L

U
L

O
R

E
E

T
L

I

Y F
C

T
M

R
H

K
D

T
A

U
H

T

I

R
F

L
E

I

S

S
E

L
N

E
B

E
S

K
U

E
D

E

I

Z
C

T
P

K
S

L
P

G
B

V
L

U
L

O
R

E
E

T
L

Source: Eurostat, Commission services calculations. 
Notes: The decomposition rests on the shift-share methodology. Shaded bars represent the contribution to market 
share dynamics stemming from changes in the exposure to a given market; solid bars measure the contribution to 
market share dynamics coming from market share changes within a given market23. Calculations use BPM6 data 
except for BG, IT, FI and MT where exports to EU are derived from national accounts; data partly unavailable 
for ES, HR and IE. 

Graph 6a: Household debt  
(consolidated, in % of GDP)  

Graph 6b: Debt of non-financial corporations  
(consolidated, in % of GDP) 

160

140

120

100

P
D
G

f
o
%

80

60

40

20

0

2000

incr. to peak

2014

K
D

Y
C

L
N

E

I

K
U

T
P

S
E

E
S

I

E F
D

L
E

T
M

E
B

E
E

U
L

R
F

T
A

V
L

T

I

R
H

U
H

L
P

T
L

K
S

I

Z S
C

G
B

O
R

09 14 10 09 09 09 09 14 00 14 13 14 14 09 14 14 10 09 12 10 10 14 09 14 13 12 09 10
Country | Peak year

250.0

200.0

150.0

P
D
G
100.0
f
o
%

50.0

0.0

2000

incr. to peak

2014

Y
C

E

I

E
B

E
S

L
N

T
P

S
E

G
B

T
M

E
E

K
D

I

K F
U

I

R S
F

R
H

V
L

T

I

U
H

T
A

L
E

E
D

O
R

T
L

Z
C

K
S

L
P

00 12 12 09 00 12 09 13 09 09 08 09 10 14 09 10 10 12 09 09 10 01 10 09 00 09 14
Country | Peak year

Source: Eurostat, Commission services calculations 
Notes:  On  Graph  6a,  the  peak  of  the  debt-to-GDP  ratio  is  indicated  on  the  horizontal  axis.  The  earliest 
observation is 2000, except for IE, SI, HR (all 2001), PL (2003), MT, LV, LT (all 2004). The 2014 value, when 
not available, is estimated from quarterly data. On Graph 6b, LU is not included due to specificities regarding 
the drivers of corporate indebtedness. The peak of the debt-to-GDP ratio is indicated on the horizontal axis. The 
earliest  observation  is  2000,  except  for  IE,  SI,  HR  (all  2001),  PL  (2003),  MT,  LV,  LT  (all  2004).  The  2014 
value, when unavailable, is estimated from quarterly data. 

Private sector debt remains high and above the indicative threshold of the scoreboard in 
several  Member  States.  Private  indebtedness  varies  substantially,  reflecting  not  only  the 

23   For a detailed presentation of the methodology used for the decomposition of export market shares, see 'A 
closer look at some drivers of trade performance at Member State level', Quarterly Report on the Euro Area, 
2012(2):29-39. 

13 

 
 
 
 
 
 
 
 
 
                                                 
degree  of  development  of  the  financial  sector  but  also  the  extent  to  which  over-borrowing 
took  place  linked  to  easy  borrowing  conditions  before  the  crisis.  Differences  are  also  quite 
substantial regarding the composition of private debt across the main sectors of the economy 
(Graphs 6a and 6b). In some countries high indebtedness is mostly linked to the accumulation 
of  debt  by  households,  often  linked  to  a  strong  growth  in  house  prices  and  the  value  of 
mortgage  stocks.  In  other  countries  indebtedness  is  high  especially  among  non-financial 
corporations. In some countries high indebtedness concern all sectors of the economy. High 
debt constitutes a vulnerability in that it amplifies the macro-financial implications of adverse 
shocks.  It  reduces  the  adjustment  capacity  of  the  economies  by  making  less  effective  the 
monetary  policy  transmission  as  indebted  corporations  hardly  benefit  from  low  interest 
rates24. In light of remaining deleveraging needs, downward adjustment in private debt stocks 
would act as a drag on growth in terms of muted investment or consumption dynamics. In this 
context,  well-working  insolvency  frameworks  would  contribute  to  reduce  the  extent  of  debt 
overhang  by  resolving  unviable  debt,  thereby  mitigating  the  drag  on  growth  linked  to 
deleveraging. 

Progress in deleveraging has been mixed, and the reduction in private debt was mainly 
the result of negative credit flows in most Member States. According to Eurostat data, at 
the  EU  aggregate  level,  debt  stocks  for  households  and  non-financial  corporations  in 
consolidated terms represented 64.6% and 77.7% of EU GDP respectively in 2014, while they 
amounted  to  68.0%  and  82.5%  in  2009.  Since  debt  levels  peaked,  progress  in  deleveraging 
has  been  mixed,  with  genuine  reductions  of  indebtedness  observed  more  often  in  the 
corporate  sector  (Graphs  6a  and  6b).  The  latest  developments  show  a  very  uneven 
deleveraging picture across countries and sectors (Graphs 7a and 7b). Throughout 2014 and 
early  2015,  active  debt  repayment  by  households  was  facilitated  by  a  favourable  growth 
contribution  in  Ireland  and  to  a  lesser  extent  in  Portugal,  Spain  and  Hungary.  Passive 
deleveraging was achieved in the United Kingdom and Denmark which reduced debt-to-GDP 
ratios  on  the  back  of  favourable  contributions  from  growth  while  keeping  credit  flowing  to 
households.  Conversely,  household  debt  continued  to  increase  in  Sweden,  Finland,  France, 
Belgium, supported by positive credit flows. In some cases, firms, too, underwent an active 
deleveraging concomitant with a favourable contribution of nominal growth. This is the case 
of  Latvia,  Ireland,  Denmark,  Slovenia  and  Portugal.  Passive  corporate  deleveraging  took 
place  only  in  a  limited  number  of  countries  (e.g.  the  United  Kingdom,  and  the  Czech 
Republic). Corporate deleveraging was however unsuccessful in a few Member States such as 
Cyprus and Greece with debt-to-GDP ratios worsening despite increased savings, on the back 
of  negative  nominal  GDP  dynamics.  Corporate  debt  increased  in  some  Member  States  like 
Austria, France, Slovakia, Poland or, to a lesser extent, Germany, supported by positive credit 
flows25.  

24   The  legacy  of  high  corporate  debt  is  likely  to  continue  to  weigh  on  the  economy.  High  private  debt  is 
generally  associated  with  low  medium-term  growth,  although  devising  specific  debt  thresholds  may  be 
analytically  challenging  (see  references  in  Chen  et  al.(2015).  'Private  Sector  Deleveraging  and  Growth 
Following  Busts',  Working  Paper  15/35,  International  Monetary  Fund,  Washington).  Debt  is  also  seen  to 
have been detrimental to post-crisis economic performance (see Bornhorst, F. and Ruiz Arranz, M. (2013). 
'Indebtedness  and  Deleveraging  in  the  Euro  Area.'  Country  Report  13/232,  International  Monetary  Fund, 
Washington; and European Central Bank (ECB), (2012), 'Corporate Indebtedness in the Euro Area.' Monthly 
Bulletin (February): 87–103.  

25   Exchange rate movements, in particular the depreciation of the euro in the second half of 2014, are likely to 
have caused significant valuation effects raising the value of non-euro denominated debts, e.g. in Ireland or 
in the Netherlands. 

14 

 
 
 
 
 
 
                                                 
Graph 7a: Drivers of households deleveraging (yoy 
change in 2015Q1) 

Graph 7b: Drivers of NFCs deleveraging (yoy 
change in 2015Q1) 

4

2

0

-2

.

p
p

-4

-6

-8

-10

10

5

0

P
D
G

f
o
%

-5

-10

-15

-20

-25

Credit flows

Writeoffs, reclass., val. changes

Nom. GDP growth

D/GDP, ch.

Credit flows

Writeoffs, reclass., val. changes

Nom. GDP growth

D/GDP, ch.

IE PT ES HU LV NL EL RO SI IT UKDK CZ DE LT EE LU HR CY FR AT PLMTSE FI BE SK

SI PT ES ROHU IE FI LT IT LV DKMTUK CZ HR EL CY EE DE SE PL AT BE SK FR NL

Active deleveraging

Passive

Unsucc. No deleveraging

Active deleveraging

Passive Unsucc.

No deleveraging

Sources: Eurostat, Commission services calculations. 
Notes: The graphs present a breakdown of the evolution of the debt-to-GDP ratios into three components: credit 
flows, nominal GDP growth (denominator effect) and other changes in the stock of debt. A reduction of leverage 
can be achieved through different combinations of debt repayment, growth of the economy and other changes in 
the  outstanding  debt  stock.  Active  deleveraging  involves  net  repayment  of  debt  (negative  net  credit  flows), 
usually leading to a nominal contraction of the sector's balance sheet and having, ceteris paribus, adverse effects 
on economic activity and asset markets. Passive deleveraging, on the other hand, consists in positive net credit 
flows  being  outweighed  by  higher  nominal  GDP  growth,  leading  to  a  gradual  decrease  in  debt/GDP.  Active 
deleveraging may turn unsuccessful, if the deflationary effects on GDP lead to stagnation or even an increase in 
the debt-to-GDP ratio26.  

Vulnerabilities  in  the  banking  sectors  of  a  number  of  Member  States  suggest  that 
impaired  access  to  finance  may  continue  to  play  a  role  for  debt  dynamics.  The  overall 
situation  of  the  banking  sector  has  been  improving  in  a  majority  of  Member  States.  Capital 
levels have been replenished and now stand at safer overall ratios27. In addition, progress has 
been  made  as  regards  the  institutional  framework  for  bank  recovery  and  resolution,  which 
reduces  the  risk  of  negative  feedback  loops  between  banks  and  sovereigns.  However, 
vulnerabilities  and  deleveraging  pressures  in  the  financial  sector  are  still  evident  in  several 
Member  States,  as  also  reflected  by  the  decline  in  the  scoreboard  indicator  of  financial 
liabilities  in  several  cases.  In  Ireland,  Greece,  Spain,  Italy,  Cyprus,  Hungary,  Portugal, 
Bulgaria, Romania and Slovenia, banks are still plagued with high non-performing loan ratios  
in their balance sheets which, in some cases, continued to increase throughout 2014 (Graph 
8). In Austria, high exposure to developments abroad may also be a source of vulnerability. 
Since  mid-2014,  the  reliance  on  central  bank  funding  has  stopped  declining,  signalling  a 
potential halt in the reduction in financial fragmentation or a reorientation of banks' funding 
towards  cheaper  official  funds28.  In  addition,  a  low  growth  and  a  low  interest  rate 
environment  is  weighing  on  bank  profitability  in  a  number  of  Member  States29.  In  this 

26   For  a  detailed  presentation,  see  P.  Pontuch,  'Private  sector  deleveraging:  where  do  we  stand?',  Quarterly 

Report on the Euro Area, 2014(4):7-19. 

27   See  European  Central  Bank  (2015),  'Financial  Stability  Review',  May  2015,  and  Joint  Committee  of  the 
European Supervisory Authorities (2015), 'Joint Committee Report on Risks and Vulnerabilities in the EU 
Financial System', JC 2015 007. 

28    Since  last  summer,  the  overall  narrowing  of  TARGET2  balances  seems  to  have  come  to  a  halt,  mainly 

driven by developments in Italy, Greece and Spain. 

29   The  low  interest  rate  environment  is  also  weighing  significantly  on  the  profitability  of  the  life  insurance 
sector with return mismatches emerging between low government bond yields and the guarantees offered to 
customers. 

15 

 
 
 
 
 
                                                 
environment,  taking  into  account  deleveraging  pressures  in  the  financial  and  non-financial 
sectors, credit contraction continued in 2014 in the most vulnerable countries.  

In  2014,  the  evolution  of  house  prices  reflected  different  positions  in  housing  cycles 
across the EU. (Graph 9) The annual change in inflation-adjusted house prices in 2014 varied 
from more than a 5 per cent fall in Slovenia and Greece to surges well above the indicative 
threshold  of  6  per  cent  in  Ireland  and  Estonia.  This  widening  of  the  distribution  reflects 
different positions in the housing cycle and different risks30. In some Member States, prices 
underwent  a  sharp  correction  during  the  crisis  and  reached  levels  that  are  well  below  what 
would  be  implied  by  fundamentals.  This  is  the  case  of  Irish  house  prices  that  sharply 
increased  during  the  last  year.  Similarly,  Hungary,  Estonia,  Lithuania  and  Slovakia  also 
exhibited important real house price increases. House prices in these countries are assessed as 
still  undervalued,  so  the  recovery  pace  may  not  signal  a  new  build-up  of  risks  in  the  near 
future. Conversely, in Member States where house price are still assessed to be overvalued, 
such  as  Sweden  or  the  United  Kingdom,  house  prices  increased  from  very  high  valuation 
levels and require careful monitoring31.  

Graph 8: Non-Performing Loans ratios (NPLs) 

2013Q4

2014Q4

50

45

40

35

30

25

20

15

10

5

0

Y
C

L
E

E

I

O
R

G
B

U
H

T

I

I

RS
H

T
L

T
P

S
E

T
M

V
L

Z
C

K
S

L
P

K
D

R
F

E
B

L
N

K
U

T
A

E
D

I

EF
E

E
S

U
L

Graph 9: House prices: valuation levels in 2013 and 
variations in 2014  

20

15

10

5

0

-5

-10

-15

-20

)

%

(

4
1
0
2

,
e
g
n
a
h
c
%

r
a
e
y
1

s
e
c
i
r
p

e
s
u
o
h

d
e
t
a
l
f
e
D

Recovering from 
undervalued levels

IE

LT

HU
BG

EE

PT

Undervalued and still 
falling

LV
CZ DK
DE
CY

SK
PL

ES

NL

HR
RO

Overvalued and still 
growing

UK

SE

MT

LU

BE

FR

AT

FI

EL

IT
SI

Correcting from 
overvalued levels

-30

-20

-10

0

10

20

30

Estimated valuation gap, 2013 (%)

Sources: For Graph 8: IMF, ECB; for Graph 9: Eurostat, ECB, BIS, OECD, Commission services calculations. 
Notes: On Graph 8, figures are all from IMF data except for FR for which the 2013Q4 IMF is extrapolated to 
2014 with the ECB 2014H1 change, and for FI for which ECB data are used. For LU, no IMF or ECB figures are 
available for 2014. On Graph 9, overvaluation gap estimated as an average of the price/income, price/rent and 
fundamental model valuation gaps32. 

The  level  of  government  debt,  although  still  high,  has  started  receding  thanks  to  past 
fiscal consolidation efforts and the pick-up in growth. Government debt, which had been 

30   House price developments have to be read in tandem with an assessment of the house price misalignment.  
31   Sweden and Luxembourg are the only countries where house prices have been virtually unaffected by the 
crisis and have been increasing steadily since the mid- 1990s. In the United Kingdom, deflated house prices 
underwent a correction of some 18 percent from the 2007Q3 peak until 2012, but went up by 8 percent in 
2014 only, and continued rising through 2015. 

32   An estimate of a house price misalignment gap is obtained as an average of three valuation indicators: (i) the 
affordability gap (the distance to the long-term average of the price-to-income ratio); (ii) the yield gap (the 
distance to the long-term average of the price-torent ratio); and (iii) an estimate of deviations of house prices 
from  equilibrium  values  justified  by  housing  demand  and  supply  fundamentals.  For  further  details,  see 
European  Commission:  'Housing  market  adjustment  in  the  European  Union,'  box  1.3,  in  'European 
Economic Forecast-Spring 2014,' European Economy 2014(3). 

16 

 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
rising  at  a  rapid  pace  since  2007,  would  only  start  decreasing  this  year,  remaining  at 
historically  very  high  levels.  The  reduction  in  the  overall  level  of  public  debt  results  both 
from the continuing decrease in the overall general government deficit and from the pick-up 
in nominal growth. As a matter of fact, adjusting for the cycle, the fiscal stance in the euro 
area  and  in  the  EU  is  broadly  neutral,  and  appropriate  to  allow  downward  debt  dynamics 
while  supporting  the  nascent  economic  recovery.  However,  in  a  number  of  countries, 
including  Greece,  Spain,  France,  Italy,  Portugal,  the  fiscal  adjustment  is  set  to  slow  down 
despite high government debt levels.  

Graph 10: Evolution of the unemployment rate since 2013 

FI

BE

FR

IT

CY

SE

SI

AT

LU

DE

MT

NL

RO

DK

CZ

UK

EE

LT

LV

PL

BG

HU

SK

IE

HR

PT

EL

ES

d
n
a
1
Q
3
1
0
2

n
e
e
w
t
e
b
e
t
a
r

l

t
n
e
m
y
o
p
m
e
n
u
n

i

e
g
n
a
h
C

2
Q
5
1
0
2

2.0

1.0

0.0

-1.0

-2.0

-3.0

-4.0

-5.0

-6.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Unemployment rate in 2013Q1

Source: Eurostat  
Notes: Latest figure is 2015Q2 except EE IT UK (2015Q1) and IE NL FI SE (2015Q3) 

Box 3: Employment and social developments 

Labour  market  conditions  in  the  EU  are  improving  and  differences  across  Member  States  are 
decreasing while the social situation in many Member States is still serious. 

Main messages from the AMR scoreboard 

In 2014, unemployment rates in the EU were still at very high levels in several countries with the 3-
year  average  exceeding  the  threshold  indicator  of  10%  in  12  Member  States  (Bulgaria,  Ireland, 
Greece,  Spain,  France,  Croatia,  Italy,  Cyprus,  Latvia,  Lithuania,  Portugal  and  Slovakia).  Overall,  in 
2014, the unemployment  rate (age group 15-74) stood at 11.6% and 10.2% in the euro area and the 
EU. However, a relatively broad-based fall in the unemployment rate started to take place in 2014 as 
the  economic  recovery  took  hold:  between  2013  and  2014  the  unemployment  rate  declined  on  an 
annual  basis  by  0.4  pp  and  0.7  pp  in  the  euro  area  and  the  EU  respectively.  In  high  unemployment 
countries, the improvement was stronger, which contributed to a reduction in the dispersion across the 
EU  and  the  euro  area.  The  decline  in  unemployment  was  particularly  marked  in  Portugal,  Spain, 
Ireland, the Baltic states but also in Hungary, Bulgaria, the United Kingdom and Poland. Conversely, 
the  unemployment  rate  increased  in  Italy  and  Finland,  while  it  broadly  stabilised  in  Germany  and 
France. In general, the improvement was stronger than what GDP growth would imply, on the back of 
improved  confidence,  visible  effects  of  structural  reforms  and  reduced  ULCs  while  hours  worked 
remained subdued. In the first half of 2015, the unemployment rate continued to decline in the large 
majority of EU countries. The drop has been sustained particularly in countries which experienced a 
rapid increase in the jobless rate during the crisis, including Cyprus, Spain, Greece and Portugal. 

17 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Activity rates remained resilient in most countries. On aggregate, between 2013 and 2014 an increase 
of  0.2  pp  and  0.3  pp  was  recorded  in  the  euro  area  and  the  EU  respectively,  which  can  largely  be 
attributed to the structural increase in the participation of women and older workers which continued 
in almost all countries. It also partly reflects the decline of the working age population, in particular in 
the Baltic states, and, to a lesser extent, in countries hit by the sovereign debt crisis. The 3-year pp. 
change  in  the  activity  rate  exceeds  the  (negative)  threshold  in  two  Member  States  only,  namely 
Portugal  and  Denmark.  In  both  countries,  this  development  is  mostly  attributable  to  the  decreasing 
participation  among  young  cohorts  that  is  not  fully  matched  by  the  increasing  participation  of  older 
workers; however, this development should be seen against an observed decrease in the share of young 
people   neither in employment  nor education and training which points to an increasing enrolment in 
education.  The  combination  of  resilient  activity  rates  and  positive  employment  growth  resulted  in 
falling unemployment rates in the majority of Member States in 2014. In general, employment growth 
was more pronounced in the tradable sector. This notably reflected a sectoral pattern of wage growth 
broadly  supportive  of  the  reallocation  of  production  from  the  non-tradable  to  the  tradable  sectors  as 
required for external rebalancing of euro area deficit countries. 

Overall,  the  improvement  in  unemployment  rates  is  mostly  linked  to  a  reduction  in  dismissal  rates 
while job findings rates, though improving, remain below pre-crisis levels. In particular, the recovery 
of the job finding rates has not been sufficient to avert an increase in long-term-unemployment rates, 
which was particularly strong over the past three years in 11 Member States, most notably in Greece, 
Spain, Portugal, Cyprus and Italy; conversely, long-term unemployment has declined in Germany, the 
Baltic  states,  Hungary  and  the  United  Kingdom.  The  persistence  of  long-term  unemployment  has 
implications  for  the  efficiency  of  labour  market  matching  and  the  risk  that  unemployment  becomes 
entrenched  ("unemployment  hysteresis")33.  Its  high  level  is  also  a  source  of  concern  because  of  its 
grave social implications, such as the depletion of human capital and increases in poverty in the EU 
since the crisis34.  

Although  the  youth  unemployment  rate  fell  at  faster  rates  than  overall  unemployment,  it  remains  at 
high levels, amounting to 23.7% and 22.2% in the euro area and  in the EU respectively in 2014. In 
tandem with total unemployment, youth unemployment started decreasing in the second half of 2013, 
with  further  improvements  in  2014  and  beginning  of  2015.  Among  countries  with  high  youth 
unemployment rates, substantial reductions were registered from the peak of 2013 in Greece, Croatia, 
Portugal, Slovakia, Bulgaria, Cyprus and Spain. Italy stands out as the only high youth unemployment 
country  in  which  the  situation  continued  to  deteriorate  for  most  of  2014.  The  overall  recent 
improvement  in  youth  employment  is  however  not  sufficient.  As  a  consequence,  the  3-year  change 
indicator  is  still  flashing  for  13  Member  States  (Belgium,  Greece,  Spain,  France,  Croatia,  Italy, 
Cyprus,  Luxembourg,  Netherlands,  Austria,  Portugal,  Slovenia,  Finland).  The  decline  in  youth 
unemployment  is  accompanied  in  most  countries  by  a  decline  in  the  share  of  young  people  that  are 
neither  in  employment,  education  nor  training.  The  NEET  rate  has  declined  to  12.4  %  in  2014  but 
remains considerably above pre-crisis levels. The highest NEET rates are recorded in Ireland, Cyprus, 
Spain, Romania, Croatia, Greece, Bulgaria and Italy, with Italy, Cyprus and Croatia experiencing the 
highest  increases  in  the  last  3-year  period.    The  youth  unemployment  rate  is  an  early  indicator  of 
worsening  labour  market  conditions.  It  also  signals  lowered  potential  output  (via  a  loss  of  skills 
formation, scarring effects and foregone earnings in the future) and is associated with a higher level of 
social exclusion.  

Long,  drawn-out  negative  employment  and  social  developments  can  have  a  negative  impact  on 
potential GDP growth in a variety of ways and risk compounding macroeconomic imbalances. 

33   See Draghi, M. (2014), 'Unemployment in the euro area', Speech at the Annual central bank symposium in 
Jackson Hole, 22 August 2014, and Arpaia, A., Kiss, A. and Turrini, A. (2014)  'Is unemployment structural 
or cyclical?' Main features of job matching in the EU after the crisis', European Economy, Economic Papers 
527, September 2014.. 

34   See  Duiella,  M.  and  Turrini,  A.  (2014),  'Poverty  developments  in  the  EU  after  the  crisis:  a  look  at  main 

drivers', ECFIN Economic Brief, Issue 31, May 2014. 

18 

 
 
 
 
 
 
                                                 
Labour mobility 

Intra-EU  labour  mobility  further  increased  in  2014,  although  the  flows  remained  below  the  level 
recorded  before  2008.  Flows  from  East  to  West  continued  to  account  for  the  bulk  of  movements, 
driven  by  differences  in  GDP  per  capita  and  wages.  Labour  mobility  has  attenuated  disparities  in 
unemployment,  and  was  reflected  in  the  increasing  importance  of  South  to  North  mobility,  from 
countries  more  affected  by  the  crisis  to  countries  that  were  less  affected.  Net  outflows  notably 
increased in countries such as Greece, Cyprus and Croatia, while net inflows increased among others 
in Germany and Austria. Net outflows decelerated in Spain, the Baltic states and in Ireland, where the 
economic  situation  has  improved  noticeably.  Over  time,  wages  have  become  more  responsive  to 
asymmetric  shocks  in  national  labour  markets,  and  the  responsiveness  of  mobility  flows  also 
increased.  Still,  their  contribution  to  smoothing  the  overall  fluctuations  of  unemployment  remains 
low35.  While  mobile  EU  citizens  show  higher  employment  rates  on  average  than  the  populations  of 
their host countries36, their human capital often appears to be underutilised, along with that of people 
born outside the EU37. 

All in all, risks stemming from vulnerabilities or trends that may potentially contribute 
to  macro-financial  instability  or  disorderly  corrections,  are  present  in  the  majority  of 
Member  States.  The  degree  of  severity  and  the  urgency  to  bring  forth  adequate  policy 
response  vary  significantly  across  Member  States  depending  on  the  nature  of  the 
vulnerabilities or unsustainable trends, as well as their confinement to one or several sectors 
of the economy:  

• 

In some Member States, vulnerabilities are present mainly with respect to the external 
sector, in the form of large negative net international investment positions. This is the 
case  of  catching-up  economies  like  Romania  and  to  a  lesser  extent,  Poland,  Latvia, 
Lithuania, Slovakia and Czech Republic. 

•  Some  countries  are  characterised  by  large  and  persistent  current  account  surpluses. 
This is notably the case of Germany and the Netherlands, whose sizeable surplus and 
growing  net  foreign  assets  stock  may  imply  rising  creditor  risks  and  have  potential 
relevance for the rest of the euro area.  

•  The  combination  of  large  stocks  of  public  debt  and  a  declining  trend  in  potential 
growth or competitiveness is a source of concerns in a number of countries despite the 
absence of external sustainability risks, as it increases the likelihood of unstable debt-
to-GDP  trajectories  and  the  vulnerability  to  adverse  shocks.  This  is  the  case  of 
countries of systemic relevance like Italy or France, but also of smaller economies like 
Belgium. 
In  a  number  of  economies,  possibly  unsustainable  trends  and  vulnerabilities  are 
confined to a particular sector of the economy. In Sweden the main source of concern 
pertains  to  the  continuous  increase  in  house  prices  and  household  debt.  In  the 
Netherlands,  household  debt  is  among  the  highest  in  the  EU,  though  household 

• 

35   European Commission (2015), Labour Market and Wage Developments in Europe 2015, Part II, Chapter 1: 

Labour mobility and labour market adjustment in the EU. 

37  

36   In 2014, the employment rate of people born in another EU country was 67 per cent, while the employment 
rate of people who were born in the country of residence was 65 per cent. The employment rate of people 
born outside the EU was 57 per cent (Source: Eurostat Labour Force Statistics, age group: 15 to 64 years). 
In  2014,  the  unemployment  rate  of  people  born  in  another  EU  country  was  13  per  cent,  while  the 
unemployment  rate  of  people  who  were  born  in  the  country  of  residence  was  10  per  cent.  The 
unemployment rate of people born outside the EU was 19 per cent. The over-qualification rate, reflecting 
highly educated workers taking low- or medium skilled jobs, was also markedly higher for EU-mobile than 
for natives, and even higher for people born outside the EU. (Source: Eurostat Labour Force Statistics). 

19 

 
 
 
 
 
 
                                                 
deleveraging  is  currently  at  play.  This  contributes  to  the  Dutch  current  account 
surplus,  alongside  other  structural  factors,  including  subdued  investment.  In  both 
cases,  internal  trends  contribute  to  the  elevated  current  account  surpluses  which  are 
otherwise the reflection of structural features of the economy such as the tax structure 
or  the  presence  of  a  large  number  of  multinationals.  The  United  Kingdom  is  also 
experiencing growing house prices that deserve close monitoring. Its current account 
deficit,  which  in  particular  reflects  sustained  consumption  does  not  seem  to  be  the 
reflection of a significant deterioration in price competitiveness. Funding pressures in 
the Austrian financial sector may constitute a vulnerability. In Estonia, risks linked to 
the  build-up  of  demand  pressures  in  the  domestic  economy  may  need  monitoring. 
Finland  is  experiencing  a  challenging  structural  shift  in  its  economy  following  the 
downsizing  of  the  electronics  sector.  Denmark  also  enters  this  category  in  light  of 
elevated household debt, even though the current assessment of risks does not point to 
a need for further investigation. This is also the case of Luxembourg and Malta where 
risks associated with the high level of private debt are contained. 

•  Some  Member  States  suffer  from  vulnerabilities  in  the  form  of  large  stocks  of  net 
liabilities  concerning  a  wide  range  of  sectors  both  domestic  and  external.  This  is 
notably  the  case  of  countries  which  used  to  run  large  current  account  deficits  in 
association with a credit boom in the domestic economy, simultaneously feeding large 
negative  net  international  investment  positions  and  elevated  private  indebtedness.  In 
general,  such  countries  are  currently  facing  high  deleveraging  needs  in  a  context  of 
limited  fiscal  space,  high  non-performing 
levels  of 
unemployment.  This  typically  concerns  euro  area  countries  such  as  Portugal,  Spain, 
Cyprus, Greece, Ireland, and Slovenia. Eastern European countries such as Hungary, 
Croatia  and  Bulgaria  are  also  facing  difficulties  in  light  of  the  elevated  external  and 
internal  liabilities.  This  poses  a  challenge especially  in  Hungary  and  Bulgaria  where 
the banking sector still needs to pursue a restructuring process.  

loans  and  unacceptable 

20 

 
 
3. 

IMBALANCES, RISKS AND ADJUSTMENT: COUNTRY-SPECIFIC COMMENTARIES  

This section provides a succinct economic reading of the scoreboard and auxiliary variables in 
each Member State. Together with the discussion of cross-country issues, it helps to identify 
the  Member  States  for  which  in-depth  reviews  (IDRs)  should  be  prepared.  As  explained 
above,  it  will  be  on  the  basis  of  the  IDRs  that  the  Commission  will  conclude  whether 
imbalances or excessive imbalances exist. 

The MIP does not apply to Member States benefiting from financial assistance in support of 
their macroeconomic adjustment programmes38, currently Greece and Cyprus. However, the 
commentaries below also concern Cyprus. The situation of Cyprus in the context of the MIP, 
including the preparation of an in-depth review, will be considered at the end of the current 
financial assistance.  

Please  refer  to  the  Statistical  Annex  for  the  full  set  of  statistics  on  the  basis  of  which  this 
economic reading and the full report has been prepared. 

Belgium:  In  February  2015,  the  Commission  concluded  that  Belgium  was  experiencing 
macroeconomic  imbalances,  in  particular  involving  competitiveness.  In  the  updated 
scoreboard,  a  number  of  indicators  are  beyond  the  indicative  threshold,  namely  losses  in 
export market shares, private and government sector debt as well as the increase in long-term 
and youth unemployment.  

Following  a  second  year  of  gains  in  export 
market  shares,  the  indicator  improved  in 
2014  and  is  gradually  approaching  the 
threshold. This improvement concurs with a 
strengthening of the current account balance 
and  stable  unit  labour  costs  developments. 
Both  are  expected  to  strengthen  further  in 
2015  given  favourable  terms  of  trade  and 
low  labour  cost  growth.  Overall,  while  still 
indicating  issues  the  scoreboard  points  to  a 
external 
stable 
performance.  Indebtedness  indicators  have 
been broadly stable for several years, though 
at  a  level  significantly  above  the  respective 
thresholds. The  high corporate debt reflects 
intra-group 
the 
lending  which  needs 
into 
taken 
account.  The  level  of  household  debt  remains  moderate  with  risks  partially  offset  by  an 
accumulation of financial assets. Public debt is stable, while contingent liabilities of the public 
sector  to  financial  institutions  have  further  abated.  The  financial  sector  continued  its 
deleveraging, in spite of rising liabilities. The observed increase in unemployment indicators, 
including long-term and youth unemployment, is mainly driven by the business cycle.  

impact  of  widespread 
to  be 

improving 

even 

or 

38  This  approach  which  avoids  duplication  of  procedures  and  reporting  obligations  has  been  established  in 
Regulation (EU) No 472/2013 (OJ L 140, 27.5.2013, p. 1). It is also in line with the Commission proposal 
on  a  facility  for  providing  financial  assistance  for  Member  States  outside  the  euro  area  (COM(2012)336, 
22.6.2012). 

21 

 
 
 
 
                                                 
Overall,  the  economic  reading  highlights  issues  relating  to  matters  of  competitiveness  for 
which  deeper  analysis  is  warranted  in  order  to  conclude  whether  dynamics  are  indeed 
shifting  into  the  right  direction.  Therefore,  the  Commission  finds  it  useful,  also  taking  into 
account the identification of an imbalance in February, to examine further the persistence of 
imbalances or their unwinding.  

Bulgaria:  In  February  2015,  the  Commission  concluded  that  Bulgaria  was  experiencing 
excessive  macroeconomic 
imbalances  requiring  decisive  policy  action  and  specific 
monitoring, in particular linked to the concerns about financial sector practices, which carry 
significant  financial  and  macroeconomic  risks.  In  the  updated  scoreboard,  a  number  of 
indicators  are  beyond  the  indicative  threshold,  namely  the  net  international  investment 
position  (NIIP),  private  sector  debt,  unit  labour  costs  and  unemployment  as  well  as  an 
increase in long-term unemployment. 

to  have  stabilised, 

The high stock of external liabilities remains 
a  source  of  vulnerability.  However,  the  net 
external  position  has  continued  to  improve, 
due to a positive current and capital account 
as  well  as  growing  external  assets.  At  the 
same  time,  gains  in  export  market  shares 
have  decelerated  but  so  have  also  increases 
in  unit  labour  costs.  While  the  financial 
sector  appears 
the 
institutional  and  regulatory  problems  that 
became  apparent  with 
failure  of 
Corporate  Commercial  Bank  have  yet  to  be 
tackled.  Private  sector  debt, 
adequately 
concentrated  in  the  non-financial  corporate 
sector, remains high. Deleveraging pressures 
could  dampen  investment  and  economic 
growth  in  the  short  term  and  could  be  an 
additional source of vulnerability, if they are not dealt with in an orderly manner. Despite past 
efforts to improve the business environment, the  insufficient development  of Bulgarian  pre-
insolvency and insolvency frameworks slow down deleveraging, increase uncertainty among 
market  participants  and  reduce  the  country's  overall  attractiveness  to  investors.  Persistent 
structural issues on the Bulgarian labour market, such as long-term unemployment and skill- 
and  qualification  mismatches,  impair  its  matching  function,  leading  to  underutilisation  of 
human capital and ultimately to higher economic and social costs. 

the 

Overall, the external and internal vulnerabilities, in particular in the financial sector are still 
present. Therefore the Commission finds it useful, also taking into account the identification 
of an excessive imbalance in February, to examine further the persistence of macroeconomic 
risks and to monitor progress in the unwinding of excessive imbalances. 

Czech  Republic:  In  the  previous  round  of  the  MIP,  no  macroeconomic  imbalances  were 
identified in the Czech Republic. In the updated scoreboard the net international investment 
position (NIIP) is beyond the indicative threshold. 

22 

 
 
 
 
 
 
 
The  current  account  balance  has  improved 
considerably in recent years, turning into an 
annual  surplus  in  2014.  The  NIIP  has  been 
gradually  reduced  and  remains  only  slightly 
beyond  the  threshold.  Risks  related  to  the 
external  position  are  limited  as  much  of  the 
foreign 
liabilities  are  accounted  for  by 
foreign direct investment and, consequently, 
net  external  debt  is  very  low.  Nevertheless, 
this  position  gives  rise  to  primary  income 
outflows  which  require  sustained 
trade 
surpluses in order to maintain sustainability. 
Competitiveness 
stable  with 
contained  growth  in  nominal  unit  labour 
costs.  There  was  a  substantial  depreciation 
of  the  real  effective  exchange  rate  in  2014, 
reflecting  the  introduction  of  an  exchange 
rate  floor  vis-à-vis  the  euro  by  the  Czech  National  Bank  at  the  end  of  2013.  These  factors 
contributed to an overall gain in export market shares in 2014, reversing the trend of previous 
years. Risks of internal imbalances appear low given relatively low private indebtedness and 
subdued private-sector credit flows. The largely foreign-owned banking sector has remained 
stable, with total financial sector liabilities increasing only moderately in 2014 and an overall 
low  percentage  of  NPL.  Public  debt  has  continued  to  fall  and  remains  comfortably  below 
threshold. Unemployment fell in 2014, with a rapid decline recorded in the first half of 2015, 
and house price growth turned moderately positive. 

appears 

Overall, the economic reading points to improving external competitiveness and low internal 
risks. Therefore, the Commission will at this stage not carry out further in-depth analysis in 
the context of the MIP. 

Denmark: In the previous round of the MIP, no macroeconomic imbalances were identified 
in  Denmark.  In  the  updated  scoreboard,  a  number  of  indicators  are  beyond  the  indicative 
threshold,  namely  the  current  account  surplus,  losses  in  export  market  shares  and  private 
sector debt as well as a decrease in activity rates.  

in  a 

row.  This 

The  current  account  balance  continues  to 
show large surpluses, slightly surpassing the 
upper  threshold  of  the  scoreboard  for  the 
second  year 
reflects 
continued  weak 
recovery  of  domestic 
demand in Denmark and high revenues from 
investment  abroad.  The  net  international 
investment position is high, mostly due to a 
foreign  direct 
stock  of 
growing  net 
investment.  The  current  account  surplus  is 
expected to decrease as the recovery gains a 
firmer  grip.  Losses  in  export  market  shares 
again  recorded  in  2014  and  remain  large  in 
cumulative  terms,  also  compared  to  other 
industrialised countries. Cumulated losses to 
a  large  extent  reflect  high  wage  and  weak 

Graph A4:  Households' debt and House Price Index

Denmark

P
D
G

f
o
%

150

125

100

75

50

25

0

0
0
1
=
5
0
0
2

130

120

110

100

90

80

70

06

07

08

09

10

11

12

13

14

Households debt

Deflated House Price Index (rhs)

Source:  Eurostat
23 

 
 
 
 
 
 
 
productivity  growth  before  the  crises  and  remain  a  challenge  for  the  economic  recovery. 
Nevertheless, price competitiveness indicators have been stable in recent years. Private sector 
debt  is  very  high  while  macro-economic  risks  remain  contained  in  relation  to  both  the  real 
economy and financial stability. In particular, relatively high household gross debt related to 
the specific mortgage system in place. House prices have adjusted over time and are now in a 
recovery phase. Households have been able to handle the house price adjustments since 2007, 
with  high  levels  of  debt  matched  by  high  levels  of  assets.  The  regulatory  and  supervisory 
measures introduced over the last years seem to have strengthened financial sector stability. 
After  the  crisis  the  employment  situation  has  stabilised,  with  low  and  decreasing 
unemployment, including long-term even if activity rates have been slightly reduced it is from 
a high level and in context of a decrease of NEET rates.  

Overall,  the  economic  reading  points  to  issues  related  to  export  performance  but  limited 
external risks and contained private sector debt risks. Therefore, the Commission will at this 
stage not carry out further in-depth analysis in the context of the MIP. 

Germany:  In  February  2015,  the  Commission  concluded  that  Germany  was  experiencing 
macroeconomic  imbalances  which  require  decisive  action  and  monitoring,  in  particular 
involving  increasing  risks  stemming  from  the  persistence  of  insufficient  private  and  public 
investment, which negatively affects growth and contributes to the very high current account 
surplus.  In  the  updated  scoreboard,  a  number  of  indicators  are  beyond  the  indicative 
threshold, namely the current account surplus, losses in export market shares and government 
debt.  

4

6

2

8

10

12

f
o
%

P
D
G

and 

Germany

stayed 

largely 

exchange 

favourable 

Graph A5:  Net lending/borrowing by sector

The current account surplus has continued to 
increase,  further  boosted  also  by  lower  oil 
prices 
rate 
developments, and the surplus is expected to 
remain  high  in  coming  years.  In  2014,  the 
relative importance of the euro area and the 
rest  of  the  world  for  the  external  surplus 
have 
stable.  The  net 
international  investment  position  is  very 
large  and  growing  rapidly.  Gross  fixed 
capital  formation  has  remained  broadly  at 
the same level since 2011. The indicator for 
export  market  share  losses  improved  on  the 
back  again  of  small  gains  in  2014  but 
remains  above  the  threshold  in  cumulated 
terms.  Unit  labour  costs  increase  above  the 
euro  area  average  but  in  accumulated  terms 
negative  gaps  to  euro  area  partners  remains.  Private  sector  deleveraging  continued  while 
private sector credit flows were positive but low. Although deflated house prices have been 
rising during the last years – with strong regional disparities – the indicator remains within the 
threshold but there is a need for close monitoring. The public debt ratio in Germany is above 
the  threshold,  although  it  continued  to  decrease  in  2014.  Very  low  and  declining 
unemployment rates reflect the robust labour market in Germany. 

Households and NPISH
Corporations

Source:  Commission services

General government
Total economy

05

13

12

11

10

09

08

14

07

06

-4

-6

-2

0

Overall,  the  very  large  and  increasing  external  surplus  and  strong  reliance  on  external 
demand  expose  growth  risks  and  underlines  the  need  for  continued  rebalancing  towards 
domestic  sources.  Therefore,  the  Commission  finds  it  useful,  also  taking  into  account  the 

24 

 
 
 
 
 
 
identification in February of imbalances requiring decisive action and monitoring, to examine 
further the risks involved in the persistence of imbalances or their unwinding. 

Estonia: In the previous rounds of the MIP, no macroeconomic imbalances were identified in 
Estonia.  In  the  updated  scoreboard,  a  number  of  indicators  are  beyond  the  indicative 
thresholds,  namely  the  net  international  investment  position  (NIIP),  unit  labour  costs  and 
house prices.  

120

130

150

160

140

0
0
1
=
0
1
0
2

Estonia

labour 

Graph A6:  Real effective exchange rate and ULC

The  negative  NIIP  remains  beyond  the 
threshold  but  it  has  been  improving  and 
more  than  half  of  the  external  liabilities 
consist  of  FDI  which  reduce  risks.  The 
current  account  has  been  in  surplus  since 
2014,  supported  by  growing  exports  of 
services.  While  there  are  large  cumulated 
gains  in  export  market  shares,  annual  gains 
were  marginal  in  2014.  The  significant 
increase in nominal unit labour costs reflects 
constrained 
domestic 
demand-led  economic  growth,  but  also  still 
catching-up  effects.  Continued  high  wage 
growth  could  negatively  affect  cost-
competitiveness.  Rapidly 
rising  house 
prices, after the burst of the credit bubble of 
2008-9, reflect the recently strong growth in 
wages, favourable lending conditions as well as the predominance of transactions in the more 
expensive  capital-city  area.  The  private  sector  debt  is  below  the  threshold  and  is  on  a 
deleveraging  path  supported  by  robust  nominal  GDP  growth  and  moderate  private  sector 
credit growth, but it is still relatively high compared with peers. In contrast, government debt 
remains  the  lowest  in  the  EU.  The  long-term  unemployment  rate,  the  youth  unemployment 
rate and the severe material deprivation rate have markedly improved.  

07
REER (HICP), vs EA18
REER (HICP), vs broad group (42)
Nominal ULC

Source:  Eurostat, Commission services

supply, 

100

110

90

13

12

80

06

11

08

09

05

10

14

Overall, the economic reading highlights issues related to a renewed build-up of pressures in 
the domestic economy. Therefore, the Commission finds it useful to further examine the risks 
involved in an in-depth analysis with a view to assess whether an imbalance exits.   

Ireland:  In  February  2015,  the  Commission  concluded  that  Ireland  was  experiencing 
macroeconomic  imbalances  which  require  decisive  action  and  specific  monitoring,  in 
particular  involving  financial  sector  developments,  private  and  public  sector  indebtedness, 
high  gross  and  net  external  liabilities  and  the  labour  market.  In  the  updated  scoreboard,  a 
number  of  indicators  are  beyond  the  indicative  threshold,  namely  the  net  international 
investment  position  (NIIP),  losses  in  export  market  shares,  private  and  government  debt, 
house prices and unemployment.  

Adjustment  in  the  current  account  position  continues  and  there  is  now  a  substantial  surplus 
also reflecting high export growth. The NIIP remained highly negative in 2014 but improved 
significantly  compared  to  2013  and  remains  on  an  improving  path.  The  net  position  hides 
major changes in the composition of external assets and liabilities. Ireland lost export market 
shares over the 5 years to 2014 but is now very close to the threshold as there was a large gain 
in 2014. This reflects strong export growth which is supported by significant price and cost 
competitiveness restoration in previous years and ULC growth remains moderate on the back 
on increases in productivity while real effective exchange rate developments are supportive. 
25 

 
 
 
Private sector debt as a percentage of GDP fell sharply in 2014 as a result of GDP growth and 
a contraction in credit flow but the ratio remains elevated, in part because of corporate sector 
debt on the balance sheet of Irish affiliates of multinationals. The non-performing loans ratio 
is also on a declining trend, though it remains high. 

The  average  house  price  increase  exceeded 
the  threshold  in  2014  but  this  comes  after  a 
steep  downward  correction  in  the  previous 
five  years.  Recent  pressures  largely  reflect 
supply  constraints  especially  in  large  urban 
areas.  Pressures  are  also  mounting  on  the 
rental  market.  Public  sector  debt  as  a 
percentage  of  GDP  fell  for  the  first  time  in 
2014  but  remains  very  high.  A  significant 
part of the drop in 2014 was due to technical 
factors  but 
is 
the  downward 
expected to be sustained. The unemployment 
indicator  remains  above  the  threshold,  with 
still  elevated  levels  of  long-term  and  youth 
unemployment,  but  this  hides  a  persistent 
decline in the unemployment rate since early 
2013. 

trajectory 

Overall,  the  economic  reading  highlights  issues  relating  to  the  NIIP,  financial  sector 
developments,  private  and  public  debt  and  the  property  market.  Therefore,  the  Commission 
finds it useful, also taking into account the identification in February of imbalances requiring 
decisive  action  and  specific  monitoring,  to  examine  further  the  risks  involved  in  the 
persistence  of  imbalances  or  their  unwinding.  This  will  be  coordinated  with  the  continuing 
post-programme surveillance. 

Spain:  In  February  2015,  the  Commission  concluded  that  Spain  was  experiencing 
macroeconomic  imbalances  which  require  decisive  action  and  specific  monitoring,  in 
particular  involving  risks  related  to  the  high  levels  of  private,  public  and  external 
indebtedness in context of very high unemployment.  

the  net 

In  the  updated  scoreboard,  a  number  of 
indicators  are  above  the  indicative  threshold, 
investment 
namely 
position  (NIIP),  losses  in  export  market 
shares,  both  private  and  government  debt, 
unemployment as well as the increase in long-
term and youth unemployment.  

international 

External  rebalancing  has  continued  and  the 
current account balance is expected to remain 
in  moderate  surplus  over  the  medium  term. 
However  the  NIIP  has  not  yet  improved 
significantly,  mainly  due 
to  negative 
valuation  effects.  The  cumulated  loss  of 
export  market  shares  remains  beyond  the 
threshold  but  the  indicator  improves  on  the 

26 

 
 
 
 
 
 
 
back of annual gains in the past two years. The improvement in export performance is in part 
attributable  to  restored  cost  competitiveness,  visible  in  negative  nominal  unit  labour  cost 
growth  and  real  effective  exchange  rate  depreciation.  Private  sector  deleveraging  continued 
throughout  2014  on  the  back  of  negative  credit  growth.  More  recent  data  indicate  a  slow-
down  as  credit  has  started  flowing  again,  especially  to  the  corporate  sector.  By  contrast, 
government  debt  has  kept  increasing,  reflecting  a  significant  yet  improving  public  deficit. 
Deflated  house  prices  seem  to  have  bottomed  out.  Although  unemployment  has  been 
declining  rapidly,  it  remains  very  high,  especially  among  the  youth,  and  the  long  term 
unemployed.  Besides,  the  improvement  in  the  labour  market  has  not  yet  translated  in  a 
reduction of poverty indicators, which remain among the highest in the EU.  

Overall,  the  economic  reading  highlights  issues  relating  to  external  sustainability,  private 
and  public  debt,  and  labour  market  adjustment.  Therefore,  the  Commission  finds  it  useful, 
also taking into account the identification of excessive imbalances requiring decisive action 
and  specific  monitoring,  to  examine  further  the  persistence  of  macroeconomic  risks  and  to 
monitor progress in the unwinding of excessive imbalances. This will be coordinated with the 
continuing post programme surveillance (PPS). 

France:  In  February  2015,  the  Commission  concluded  that  France  experienced  excessive 
macroeconomic imbalances, which require decisive policy action and specific monitoring, in 
particular  involving  risks  related  to  a  deterioration  of  competitiveness  and  the  high  level  of 
public  indebtedness.  In  the  updated  scoreboard,  a  number  of  indicators  remain  above  their 
indicative thresholds, namely losses in export market shares, private debt, government debt, 
unemployment as well as the increase in long-term unemployment.  

)

%

2.5

1.0

1.5

2.0

120

100

France

(
y
-
o
-
y
e
g
n
a
h
c

laying 

the  ground  for 

remain  well  above 

Graph A9:  Potential Growth and Public Debt

The  current  account  balance  has  remained 
stable  showing  a  moderate  deficit  while  the 
net  international  investment  position  has 
remained  negative  and  further  deteriorated 
in  2014.  Accumulated  losses  in  export 
market  shares 
the 
threshold  despite  limited  annual  gains  in 
2014 
improved 
indicator  values  in  coming  years.  Labour 
costs remain high and continue to weigh on 
the  cost-competitiveness  of  firms.  Private 
debt is above the threshold but deleveraging 
pressures  are  limited  in  a  context  of  mildly 
positive  credit  growth.  The  very  high 
general  government  sector 
indebtedness 
further  increased  in  2014  and  risks  from 
public  debt  dynamics  in  a  context  of  low 
growth  and  inflation  remain.  Real  house  prices  are  slowly  correcting.  Adjustment  in  the 
labour market is an issue where unemployment has been increasing, and is now beyond the 
threshold, accompanied by increases in long-term and youth unemployment.  

Capital Accumulation Contribution
TFP Contribution
Total Labour (Hours) Contribution
PF Potential Growth
General Government Debt (rhs)

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Source: Commission services

f
o
%

P
D
G

f
o
e
t
a
R

-0.5

0.5

0.0

20

80

40

60

0

Overall, the economic reading highlights issues linked to competitiveness developments and 
the  high  level  of  general  government  debt    in  a  context  of  low  growth  and  low  inflation. 
Therefore  the  Commission  finds  it  useful,  also  taking  into  account  the  identification  of  an 
excessive imbalance in February, to examine further the persistence of macroeconomic risks 
and to monitor progress in the unwinding of excessive imbalances. 

27 

 
 
 
 
 
 
 
 
 
 
 
 
Croatia:  In  February  2015,  the  Commission  concluded  that  Croatia  was  experiencing 
excessive  macroeconomic 
imbalances  requiring  decisive  policy  action  and  specific 
monitoring,  in  particular  involving  risks  related  to  weak  competitiveness,  large  external 
liabilities  and  rising  public  debt,  coupled  with  weak  public  sector  governance,  and  dismal 
employment  performance  in  a  context  of  subdued  growth.  In  the  updated  scoreboard,  a 
number  of  indicators  are  beyond  the  indicative  threshold,  namely  the  net  international 
investment position (NIIP), losses in export market shares, government debt, unemployment 
as well as the increase in long-term and youth unemployment.  

l

)

6

4

2

0

%

-2

w
o
r
g

(
e
t
a
r
h
t

Croatia

Graph A10:  GDP growth and Government net 
borrowing

The current account turned into a surplus in 
2013 as growth of export volumes picked up 
and  outpaced  that  of  imports.  The  negative 
NIIP,  as  well  as  high  net  external  debt,  did 
not  improve  and  remains  at  high  levels. 
Despite recent annual gains in export market 
shares  the  cumulative  losses  remain  very 
substantial.  Cost  competitiveness  indicators 
show  some  adjustment  as  unit  labour  cost 
growth  is  negative  while  the  real  effective 
exchange  rate  is  stable.    Even  if  below  the 
threshold  private  sector  debt 
is  high 
compared to peer countries. While banks are 
well-capitalized, credit growth remains weak 
in  a  context  of  deleveraging  pressures,  high 
NPLs  and  a  weak  macroeconomic  outlook. 
Public  sector  debt  has  been  steadily 
increasing at a sustained pace since 2008 on the back of high deficits and the assumption of 
contingent  liabilities.  Past  compression  of  economic  activity  coupled  with  limited  wage 
adjustment  has  taken  a  toll  on  employment,  including  long  term  and  youth  unemployment. 
People at risk of poverty or social exclusion continue to represent a relatively large share of 
the population. That said there are recent positive economic developments and an improved 
economic outlook. 

Net lending (+) or net borrowing (-): general government,
share of GDP

05
10
Real GDP annual growth rate

Source:  Eurostat

a
u
n
n
A

-10

06

13

09

12

07

14

11

08

-4

-8

-6

Overall,  the  economic  reading  highlights  risks  as  regards  external  and  public  debt 
sustainability and labour market adjustment. Therefore, the Commission finds it useful, also 
taking  into  account  the  identification  of  an  excessive  imbalance  in  February,  to  examine 
further the persistence of macroeconomic risks and to monitor progress in the unwinding of 
excessive imbalances. 

Italy:  In  February  2015,  the  Commission  concluded  that  Italy  was  experiencing  excessive 
macroeconomic  imbalances  requiring  decisive  policy  action  and  specific  monitoring, 
particularly  involving  risks  stemming  from  the  very  high  public  debt  and  the  weakness  of 
both  cost  and  non-cost  competitiveness  in  a  context  of  weak  growth  and  productivity 
dynamics.  In  the  updated  scoreboard,  a  number  of  indicators  are  beyond  the  indicative 
thresholds, namely losses of export market shares, government debt, unemployment as well as 
the increase in long-term and youth unemployment.  

28 

 
 
 
 
 
 
 
 
 
 
net 

and 

The 

current 

surplus 

account 

international 

decline 
the 

The 
further 
increased  in  2014,  helping  to  reduce  the 
negative 
investment 
position,  driven  by  expanding  exports  and 
weak  domestic  demand  which  however  is 
recovering  in  2015.  Export  market  share 
losses recovered some ground, supported by 
contained  increases  in  cost  competitiveness 
labour 
indicators. 
of 
low-inflation 
productivity 
environment 
further 
competitiveness  gains  however.  While  the 
has 
debt-to-GDP 
private-sector 
remained  stable,  the  public  debt  ratio  has 
risen further in 2014, driven by negative real 
growth, 
continued 
inflation 
budgetary  deficits.  Economic  weakness  was 
also  reflected  in  the  declining  share  of  investment  in  GDP,  partially  driven  by  the  further 
slight  contraction  of  private-sector  credit  in  2014.  Financing  conditions,  despite  some 
improvements  since  mid-2014,  continue  to  be  affected  by  banks’  large  stock  of  non-
performing  loans.  The  unemployment  rate  peaked  in  2014,  as  did  the  long-term  and  youth 
unemployment  rates  in  a  context  of  high  NEET  rates.  Poverty  and  social  indicators  were 
broadly stable in 2014, albeit at worryingly high levels. 

back 

ratio 

hold 

low 

and 

Overall,  the  economic  reading  highlights  issues  relating  to  subdued  productivity  growth, 
holding  back  growth  prospects  and  improvements  in  competitiveness  and  making  it  more 
challenging  to  reduce  public  indebtedness.  Therefore,  the  Commission  finds  it  useful,  also 
taking into account the identification of excessive imbalances in February, to examine further 
the persistence of macroeconomic risks and to monitor progress in the unwinding of excessive 
imbalances. 

Cyprus:  Since  March  2013,  Cyprus  has  been  implementing  a  macroeconomic  adjustment 
programme with financial assistance.  
Therefore,  the  surveillance  of  imbalances 
has  taken  place  in  the  context  of  the 
programme,  and  not  under  the  MIP.  Under 
the  programme,  Cyprus  has  implemented  a 
number  of  important  measures  aimed  at 
correcting  its  excessive  imbalances  and  the 
economy is now recovering and the banking 
system  is  in  the  process  of  stabilising. 
Nevertheless,  in  the  updated  scoreboard,  a 
number  of  indicators  remain  beyond  the 
indicative  thresholds,  namely,  the  current 
account  deficit, 
international 
investment position (NIIP), losses in export 
market 
debt, 
government debt, unemployment as well as 
the 
long-term  and  youth 
unemployment.  

the  net 

increase 

private 

shares, 

sector 

in 

29 

 
 
 
 
The current account deficit remains high despite some adjustment, and insufficient to stabilise 
the  large  stock  of  net  external  liabilities.  Furthermore,  the  current  account  adjustment  has 
taken  place  mostly  through  a  contraction  of  imports,  while  accumulated  losses  in  export 
market shares are substantial even if there has been a limited gain on an annual basis in 2014. 
There have been gains in cost competitiveness, as reflected in the significant reduction in unit 
labour costs and decline in the HICP-based  real  effective  exchange rate. Private  sector debt 
remains very high and the deleveraging progress is proving slow both for households and for 
corporations  and  despite  important  reforms  helping  to  address  the  excessively  high  ratio  of 
non-performing loans in the banking system. House prices continue to decline, in response to 
the  on-going  adjustment  in  the  housing  market,  but  the  pace  of  decline  has  decelerated. 
Government  debt  is  very  high  and  risks  to  fiscal  sustainability  present.  The  unemployment 
rate increased significantly as a consequence of the adverse economic developments including 
long term and youth unemployment.  

Overall,  the  economic  adjustment  programme  has  helped  Cyprus  reduce  its  excessive 
macroeconomic imbalances and to manage the related risks. The  situation  of Cyprus  in the 
context of the MIP will be assessed at the end of the current financial assistance programme 
and will also depend on the post programme arrangements to be agreed. 

Latvia: In the previous round of the MIP, no macroeconomic imbalances were identified in 
Latvia. In the updated scoreboard, a number of indicators are beyond the indicative threshold, 
namely the net international investment position (NIIP), unit labour costs and unemployment.  

The  current  account  remains  in  deficit  and 
the  negative  NIIP  ratio  significantly  beyond 
the  threshold,  although  it  is  improving  over 
time. At the same time, a very large share of 
this  liability  reflects  FDI  stocks  and  net 
external debt is at a moderate level and also 
declines.  There  are  gains  of  export  market 
shares  although  at  a  decreasing  pace.  The 
improving  trade  balance  helps  to  limit  the 
current-account  deficit.  Meanwhile  exports 
significant 
have 
readjustment  in  products  and  markets  in  the 
context  of  a  volatile  external  environment 
and  significant  disruptions  in  trade  with 
Russia.  Unit  labour  costs  have  continued  to 
rebound  from  the  sharp  drop  during  the 
crisis  and  the  indicator  is  now  marginally 
above  the  threshold.  House  prices  are  recovering  from  a  low  level.  The  financial  sector 
remains  robust  and  the  process  of  deleveraging  is  still  ongoing  despite  low  interest  rates. 
Public and private debt ratios remain significantly below the thresholds. Unemployment is on 
a  decreasing  trend,  although  still  above  the  threshold.  Both  long-term  and  youth 
unemployment have decreased substantially over the past two years. 

undergoing 

been 

Overall,  the  economic  reading  highlights  risks,  although  limited  on  the  external  side  in  a 
context of progressive internal rebalancing. Therefore, the Commission will at this stage not 
carry out further in-depth analysis in the context of the MIP. 

30 

 
 
 
 
 
 
 
 
Lithuania: In previous rounds of the MIP, no macroeconomic imbalances were identified in 
Lithuania.  In  the  updated  scoreboard  a  number  of  indicators  are  beyond  the  indicative 
threshold,  namely  the  net  international  investment  position  (NIIP),  unit  labour  costs,  house 
prices and unemployment.  

the 

negative  NIIP 

Against  a  background  of  a  current  account 
adjustment 
has 
continuously  improved  over  the  past  years. 
Inward FDI implies a substantially lower net 
external  debt.  There  are  cumulated  gains  in 
export  market  shares  but  the  pace  has 
declined substantially as a result of declining 
exports  mainly  to  Russia.  There  have  been 
some  limited  losses  in  cost  competitiveness 
with  a  slightly  appreciating  real  effective 
exchange rate and nominal ULC growing at 
a  pace  slightly  below  the  threshold.  Both 
private  sector  and  government  debt  ratios 
remained  relatively  low,  with  the  private 
sector  continuing  to  deleverage.  Financial 
sector liabilities were  on the rise, and credit 
flows to non-financial corporations showed a 
small increase in 2014. Deflated house prices had stabilised after previous sharp corrections. 
Unemployment  continued  to  decline  towards  the  threshold  and  long  term  and  youth 
unemployment show significant improvements.   

Overall, the economic reading highlights issues relating to the external performance although 
of  limited  risk.  Therefore,  the  Commission  will  at  this  stage  not  carry  out  further  in-depth 
analysis in the context of the MIP. 

Luxembourg:  In  the  previous  round  of  the  MIP,  no  macroeconomic  imbalances  were 
identified for Luxembourg. In the updated scoreboard, a number of indicators are beyond the 
indicative threshold, namely private sector debt, the growth rate of financial sector liabilities 
as well as the youth unemployment rate.  

than 

offset 

that  more 

Luxembourg’s  substantial  current  account 
surplus  was  further  reduced  on  the  back  of 
sharp  increase  of  the  deficit  of  primary 
the 
income 
improvement  of  the  balance  of  trade  and 
services.  Partially  due 
to  a  positive 
contribution of productivity, unit labour cost 
growth  abated  in  2014,  contributing  to  the 
sizeable  gains  of  export  market  shares. 
Private  sector  indebtedness  (consolidated 
intra 
figures  but  not  for  cross  border 
company  loans  which  are  high)  remained 
well above the threshold in 2014. In spite of 
high  level  of  indebtedness,  deleveraging 
does not take place. The government debt is 
low.  While  financial  sector  liabilities  grew 
substantially  the  leverage  of  the  financial 

31 

 
 
 
 
 
sector  remains  low  and  even  if  there  are  risks  given  the  size  of  the  sector  they  are  limited. 
Real  house  prices  growth  continued  to  accelerate  in  2014  where  supply  and  demand 
mismatches  on  housing  market  remain  which  reduce  the  likelihood  of  a  strong  price 
correction. Youth unemployment increased although in a context of low unemployment. 

Overall, the economic reading highlights a gradually improving economic environment with 
reduced  risks.  Therefore,  the  Commission  will  at  this  stage  not  carry  out  further  in-depth 
analysis in the context of the MIP. 

Hungary:  In  February  2015,  the  Commission  concluded  that  Hungary  was  experiencing 
macroeconomic  imbalances  which  require  decisive  action  in  particular  involving  the 
continued  adjustment  of  the  negative  net  international  investment  position  (NIIP)  and  the 
relatively high public debt. In the updated scoreboard, a number of indicators are beyond the 
indicative threshold, namely the net international investment position, losses in export market 
shares and government debt.  

continued 

The strengthening of the current account to a 
surplus  since  2010  has  ensured  a  very  rapid 
and sustained decrease in the NIIP even if it 
remains at a high level. The improvement in 
the  current  account  has  been  mainly  driven 
by weak domestic demand. Unit labour cost 
growth  has  been  relatively  dynamic  but  this 
mainly  reflected  a  terms  of  trade  effect, 
while  the  real  effective  exchange  rate  has 
depreciated.  Annual  gains  in  export  market 
shares 
reducing 
in 
cumulated  losses.  Private  sector  debt  is 
deleveraging 
level  of  non-
the 
performing  loans  remains  high,  a  burden  on 
the  financial  sector,  which  contribute  to 
negative  credit  flows.  Since  mid-2013, 
growth  has  picked  up  strongly.  The  pace  of 
deleveraging  has  slowed  down,  also  impacted  by  the  subsidised  lending  schemes  by  the 
Central  Bank.  The  decline  in  real  housing  prices  seems  to  have  come  to  a  halt.  General 
government  debt  has  continued  to  decline  gradually,  although  at  a  rather  slow  pace.  The 
constrained growth potential of the economy may still aggravate the country’s vulnerabilities. 
The  unemployment  indicator  fell  below  the  threshold  due  to  higher  employment.  Poverty 
indicators  indicate  that  the  overall  rate  of  people  at-risk  of  poverty  or  social  exclusion 
decreased, although still high. 

2014 

and 

Overall, the economic reading highlights external risks, although reduced, while the internal 
recovery  is  hampered  by  deleveraging  pressures  in  a  context  of  a  low  growth  potential. 
Therefore,  the  Commission  finds  it  useful,  also  taking  into  account  the  identification  in 
February of imbalances requiring decisive action to examine further the risks involved in the 
persistence of imbalances or their unwinding.  

Malta: In the  previous round  of  the MIP,  no  macroeconomic imbalances  were identified in 
Malta. In the updated scoreboard, a number of indicators are beyond the indicative threshold, 
namely losses in export market shares, private and public debt. 

32 

 
 
 
 
f

80

140

100

120

180

160

o
%

P
D
G

Malta

Graph A17:  Debt across sectors in the economy

The  current  account  balance  and  the  net 
international  investment  position  improved 
considerably  in  2014.  The  improvement  in 
the net international investment position also 
reflects  favourable  developments  on  the 
economy’s  financial  account,  supported  by 
market valuation changes and exchange rate 
movements.  There  have  however  been 
losses  in  export  market  shares  in  recent 
years,  which,  if  persisting,  may  indicate 
risks of competitiveness erosion even if cost 
competitiveness developments moderated in 
2014  as  the  growth  in  unit  labour  costs 
decelerated  while 
effective 
exchange  rate  remained  unchanged.  Private 
debt  is  still  elevated,  particularly  due  to  the 
corporate sector but the debt-to-GDP ratio is 
correcting,  reflecting  strong  economic  growth  as  well  as  subdued  credit  growth.  General 
government  debt  is  adjusting  slowly  as  the  budget  balance  consolidates,  mainly  thanks  to 
higher  budget  revenues,  also  reflecting  favourable  macroeconomic  environment.  The 
economy’s  adjustment  capacity  is  supported  by  strong  labour  market  performance,  in 
particular  robust  gains  in  employment  and  a  low  unemployment  rate,  including  youth 
unemployment.  

Households
Non-financial corporations
General Government (EDP)

Source:  Eurostat

real 

the 

10

09

60

08

07

20

06

05

12

11

40

14

13

0

Overall,  the  economic  reading  highlights  risks  from  a  weak  export  performance,  limited 
external risks and an ongoing domestic deleveraging. Therefore, the Commission will at this 
stage not carry out further in-depth analysis in the context of the MIP.  

Netherlands:  In  February  2015,  the  Commission  concluded  that  the  Netherlands  was 
experiencing macroeconomic imbalances, particularly involving risks stemming from the high 
level  of  private  debt  while  the  high  current  account  surplus  may  reflect  an  inefficient 
allocation  of  capital.  In  the  updated  scoreboard,  a  number  of  indicators  are  beyond  the 
indicative  threshold,  namely  the  current  account  surplus,  losses  in  export  market  shares, 
private  sector  debt,  government  debt  as  well  as  the  increase  in  long-term  and  youth 
unemployment.  

deleveraging, 
the 

The  current  account  surplus,  has  been 
the  back  of 
increasing  until  2013,  on 
remains 
household 
significantly  above 
threshold.  The 
surplus is partially due to structural features 
of  the  economy,  such  as  a  structurally  high 
re-exports  balance  and  capital  flows  of 
multinationals.  It  also  reflects  high  retained 
earnings,  and  thus  high  savings  of  the 
corporate  sector,  compared  to  its  relatively 
weak 
overall 
investment.  However, 
including  residential 
investment  activity, 
investment,  seems  to  have  been  gaining 
strength  in  2015  and  is  expected  to  recover 
further.  There  are  still  cumulated  losses  in 

33 

 
 
 
 
 
 
 
 
export  market  shares  but  the  annual  gains  in  2013/2014  point  to  an  improvement  looking 
forward. Cost competitiveness indicators are stable. Private sector debt remains significantly 
above  the  threshold  but  overall  stable  even  if  there  are  deleveraging  pressures  in  the 
household sector given the large share of households with negative net housing equity. Policy 
measures  such  as  lowering  mortgage  interest  deductibility  and  loan-to-value  ratios  are 
expected to contribute to a gradual, but slow reduction of household debt and a more resilient 
financial sector. Public debt is moderately above the threshold and stable. Unemployment is 
relatively contained. Youth unemployment has increased from low levels but it is improving. 
Long-term unemployment has been on an increasing trend, mainly driven by unemployment 
of older workers. 

Overall,  the  economic  reading  highlights  issues  relating  to  the  high  private  debt  levels  and 
persistent  savings  and  investment  differences  reflected  in  a  high  current  account  surplus. 
Therefore,  the  Commission  finds  it  useful,  also  taking  into  account  the  identification  of  an 
imbalance in February, to examine further the persistence of imbalances or their unwinding. 

Austria:  In  the  previous  round  of  the  MIP,  Austria  was  not  identified  as  experiencing 
imbalances.  In  the  updated  scoreboard,  a  number  of  indicators  are  beyond  the  indicative 
threshold, namely losses in export market shares and government debt as well as the increase 
in youth unemployment.  

80

40

60

100

120

140

f
o
%

P
D
G

the 

Austria

and 

current 

account 

reflecting 

restructuring 

considerably, 

and  winding 

investment  position  are 

Graph A19:  Debt across sectors in the economy

net 
The 
international 
in 
positive  positions.  However,  accumulated 
losses 
in  export  market  share  remain 
substantial  while  cost  competitiveness 
concerns appear contained, with unit labour 
cost  growing  moderately  and 
the  real 
effective exchange rate mildly appreciating. 
the  general  government  debt 
In  2014 
a 
increased 
continued  strong  impact  on  public  finances 
of 
down 
distressed financial institutions and pointing 
to  still  large  feedback  loops  between  the 
financial sector and the general government. 
The protracted restructuring of such banks is 
also  connected  with  the  uncertainty  around 
its  legal  framework.  Funding  cost  pressures  have  increased  in  connection  with  rating 
downgrades  of  Austrian  banks,  and  risks  connected  the  exposure  to  Central-,  Eastern,  and 
South-Eastern Europe, in particular regarding recent geopolitical developments in Russia and 
Ukraine.  In  conjunction  with  asset  restructuring  to  meet  regulatory  requirements,  these 
developments  are  potentially  weighing  on  the  banks'  lending  capacity  and  could  cause 
negative spillovers on credit growth and economic activity at home and abroad. Private sector 
debt remains slightly below the threshold at a relatively stable level, while credit flows to the 
increases  have  decelerated.  The 
private  sector  moderately  decrease.  House  prices 
unemployment  rate  remains  stable  at  relatively  low  levels  while  youth  unemployment  has 
increased but also at low levels.  

Households
Non-financial corporations
General Government (EDP)

Source:  Eurostat

20

10

08

06

14

12

13

11

05

07

09

0

Overall,  the  economic  reading  highlights  issues  related  to  the  financial  sector,  notably  its 
high  exposure  to  developments  abroad,  the  actual  and  potential  spillovers  between  the 
financial sector and public finances and the impact on credit provided to the private sector. 

34 

 
 
 
 
 
 
 
Therefore, the Commission finds it useful to examine further the risks involved in an in-depth 
analysis with a view to assess whether an imbalance exists.  

Poland: In the previous round of the MIP, no macroeconomic imbalances were identified in  
Poland. In the updated scoreboard, the net international investment position (NIIP) is beyond 
the indicative threshold.  

external 

vulnerability 

improvement 

The current account has been adjusting for a 
number of years and now shows a stable but 
moderate  deficit.  This 
is 
chiefly  explained  by  stronger  merchandise 
export  and  a  lower  income  account  deficit. 
While  the  highly  negative  NIIP  improved 
marginally, 
is 
contained as FDI accounts for a large part of 
foreign  liabilities.  There  are  gains  in  export 
market  shares  in  accumulated  terms  and 
quite  substantial  gains  in  annual  terms  both 
2013  and  2014.  Cost  competitiveness 
indicators  also  show  a  benign  picture  with 
reduction  in  ULC.  Private  sector  debt  has 
been broadly stable at a level well below the 
indicative thresholds. Also public sector debt 
is well below the threshold and was reduced 
in 2014 due to a one-off transfer of assets from the second pillar private pension fund to the 
general government following the partial reversal of the 1999 systemic pension reform. The 
banking  sector  remained  well  capitalized,  liquid  and  profitable,  despite  a  sizable  stock  of 
loans denominated in foreign-currency. After five years of decline, real house prices increased 
again  in  2014.  Compared  to  last  year,  the  unemployment  rate  moved  below  the  indicative 
threshold.  

Overall, the economic reading points to some issues related to the external position but with 
contained  risks.  Therefore,  the  Commission  will  at  this  stage  not  carry  out  further  in-depth 
analysis in the context of the MIP. 

Portugal:  In  February  2015,  the  Commission  concluded  that  Portugal  was  experiencing 
imbalances  requiring  decisive  policy  action  and  specific 
excessive  macroeconomic 
monitoring particularly involving risks from high levels of external, public and private debt, 
deleveraging  pressures  and  elevated  unemployment.  In  the  updated  scoreboard  a  number  of 
indicators  are  still  beyond  the  indicative  threshold,  namely  the  net  international  investment 
position (NIIP), private sector debt, government debt, unemployment as well as the decrease 
in the activity rate, increase in long term unemployment and  youth unemployment.  

The  net  international  investment  position  is  highly  negative  but  external  sustainability  has 
been slowly improving supported by a sharp current account adjustment leading to moderate 
current account surpluses and in a context of better growth conditions. Accumulated losses of 
export  market  shares  have  been  reduced  to  reach  a  level  within  the  threshold  explained  by 
substantial  annual  gains  in  2013/2014  and  supported  by  cost  competitiveness  adjustment. 
Private sector debt is very high. Nevertheless, corporate deleveraging accelerated in 2014 and 
credit growth remains negative. A high level of non-performing loans (NPLs) weighs on the 
balance sheets of both the non-financial and financial sectors. Public sector debt is also very 

35 

 
 
 
 
 
 
high  but  is  now  beginning  to  decline.  The 
unemployment  rate  is  elevated  and  a  low 
activity  rate  and  high  levels  of  long-term 
and  youth  unemployment  are  a  concern. 
However, 
unemployment 
declined,  including  among  younger  people 
and long-term unemployment. 

since 

2014 

in  a  context  of 

Overall  the  economic  reading  highlights 
issues  relating  to  very  high  indebtedness 
across  sectors  but  with  progress  with 
deleveraging 
slowly 
improving  economic  conditions.  Therefore 
the  Commission  finds  it  useful,  also  taking 
identification  of  an 
into  account 
to 
in  February, 
excessive 
of 
persistence 
examine 
macroeconomic risks and to monitor progress in the unwinding of the excessive imbalances. 
This will be coordinated with the continuing post-programme surveillance.  

the 
imbalance 
further 

the 

Romania:  In  February  2015  the  Commission  concluded  that  Romania  was  experiencing 
macroeconomic  imbalances,  which  require  policy  action  and  monitoring  particularly 
involving risks from the relatively large negative net international investment position (NIIP), 
a  weak  medium-term  export  capacity  and  while  financial  sector  stability  was  preserved, 
external  and  internal  vulnerabilities  of  the  banking  sector  remained.  In  the  updated 
scoreboard, the net international investment position is beyond the indicative threshold.  

0

20

30

40

-10

-40

-50

-20

-30

P
D
G

f
o
%

Romania

Graph A22:  NIIP and CA balance

The  highly  negative  NIIP  reflects 
the 
accumulation  of  current-account  deficits  in 
the  pre-crisis  period  but  is  on  a  decreasing 
path. Net external debt is around half of the 
NIIP.  Net  FDI  inflows  have  increased  over 
the past two years. The current account has 
been  narrowing  reaching  a  small  deficit  in 
2014, 
largely  driven  by  strong  export 
growth,  but  may  widen  somewhat  again  in 
future  years.  The  trade  balance  remained 
positive  in  2014  and  export  market  shares 
have 
gains.  Cost-
annual 
competitiveness  indicators  were  stable  in 
the  real  effective  exchange 
2014  and 
appreciated only slightly. Private sector debt 
remains  relatively  low,  while  private  credit 
growth has recently recovered. The banking 
sector  appears  well  capitalized  while  the  share  of  non-performing  loans  has  decreased 
significantly. A balance sheet assessment and stress test in the insurance sector was completed 
in July 2015 and an AQR and stress test in the banking sector has been launched. Public debt 
remains  low,  but  recently  agreed  fiscal  measures  and  ad-hoc  wage  increases  for  some 
categories  of  public  employees  point  toward  a  significant  fiscal  relaxation.  Long-term  and 
youth unemployment and poverty indicators have improved modestly in 2014.  

Source: Commission services

Net international investment position

Net External Debt (minus sign)

Current account balance (rhs)

showed 

-20

-10

-60

-70

-80

14

08

05

07

06

09

10

11

12

13

10

0

36 

 
 
 
 
 
 
the  economic  reading  highlights 

Overall, 
the  external  position, 
competitiveness  and  fiscal  sustainability.  Therefore,  the  Commission  finds  it  useful,  also 
taking  in  to  account  the  identification  of  imbalances  in  February,  to  examine  further  the 
persistence of imbalances or their unwinding.  

issues  related 

to 

Slovenia:  In  February  2015,  the  Commission  concluded  that  Slovenia  was  experiencing 
macroeconomic imbalances, which require decisive action and specific monitoring, in particular 
involving  risks  stemming  from  an  increasing  level  of  government  debt,  the  interplay  of 
corporate and banking sector restructuring and the underlying non-performing loans work-out, 
the  efficiency  of  state-owned  enterprises,  and  very  weak  investment.  In  the  updated 
scoreboard,  a  number  of  indicators  are  beyond  the  indicative  threshold,  namely  the  net 
international investment position (NIIP), losses in export market shares, government debt as 
well as the increase in long-term and youth unemployment.  

0

10

-10

-20

f
o
%

P
D
G

over 

Slovenia

2013-2014 

remained 
the 

Graph A23:  NIIP and CA balance

subdued.  As 
net 

The  current  account  pursued 
its  sharp 
correction  to  reach  a  sizeable  surplus  in 
2014,  as  exports  expanded  and  domestic 
demand 
a 
consequence, 
international 
investment  position  improved  but  remained 
beyond, though close to, the threshold. Price 
and  cost  competitiveness  improved  further 
as  unit  labour  costs  declined.  This  has 
supported  annual  gains  in  export  market 
although 
shares 
accumulated 
the 
threshold.  Private  sector  debt  decreased  in 
sector 
2014, 
deleveraging,  largely  due  to  negative  credit 
growth.  The  deleveraging  of  the  financial 
additional  transfers  of  non-
facilitated  by 
continued, 
sector 
performing  loans  to  the  state-owned  Bank  Assets  Management  Company,  coupled  with 
further  bank  recapitalisations  by  the  government.  As  a  result,  the  government's  total  debt 
increased  further  and  remains  significantly  above  the  threshold.  The  unemployment  rate 
decreased in 2014 after peaking in the previous year. While employment resumed growth in 
2014 after 5 years of contraction, the long-term unemployment rate remained very high and 
the  youth  unemployment  rate  decreased  only  marginally.  Both  remain  beyond  their 
thresholds.  

Net international investment position
Current account balance

05* 06* 07* 08* 09* 10 11 12 13 14

remains  above 

Source:  Eurostat

corporate 

driven 

losses 

also 

by 

-30

-50

-40

Overall, the economic reading highlights issues relating to the long-term fiscal sustainability, 
private sector deleveraging and labour market adjustment. Therefore, the Commission finds it 
useful,  also  taking  into  account  the  identification  in  February  of  imbalances  requiring 
decisive  action  and  specific  monitoring  to  examine  further  the  risks  involved  in  the 
persistence of imbalances or their unwinding. 

Slovakia:  In  the  previous  rounds  of  the  MIP,  Slovakia  was  not  identified  as  experiencing 
macroeconomic imbalances. In the updated scoreboard, a number of indicators remain above 
the  indicative  thresholds,  namely  the  net  international  investment  position  (NIIP)  and 
unemployment. 

The  current  account  balance  has  been  showing  a  surplus  since  2012  but  the  NIIP  has 
continued  to  worsen,  along  with  the  ongoing  inflow  of  FDI  which  largely  relates  to  the 

37 

 
 
 
 
 
 
 
 
 
automotive  industry.  Export  market  shares 
showed  some  losses  on  an  annual  basis, 
reflecting  modest  real  effective  exchange 
rate appreciation and some, albeit contained, 
nominal ULC increases. In cumulated terms 
there  are  still  market  share  gains.  Private 
sector  credit  flows  accelerated  in  recent 
years, contributing to the upward path of the 
private sector debt  ratio, which  nevertheless 
the 
still  remains  well  below 
indicative 
threshold.  The 
foreign-owned 
largely 
banking  sector  is  well-capitalised  and  its 
to  have 
total 
increased  only  moderately.  The  general 
government  debt  ratio  decreased  marginally 
in  2014  and  remains  below  the  indicative 
threshold.  Although  activity  rates  have 
gradually  improved  in  recent  years,  structural  unemployment  represents  the  most  pressing 
economic policy issue.  

liabilities  are  estimated 

Overall, the economic reading highlight external issues but with limited risks while structural 
unemployment  remains  a  challenge.  Therefore,  the  Commission  will  at  this  stage  not  carry 
out further in-depth analysis in the context of the MIP. 

Finland:  In  February  2015,  the  Commission  concluded  that  Finland  was  experiencing 
macroeconomic  imbalances,  in  particular  those  related  to  competitiveness.  In  the  updated 
scoreboard,  a  number  of  indicators  are  above  their  respective  indicative  thresholds,  namely 
losses  in  export  market  shares,  private  sector  debt  as  well  as  the  increase  in  youth 
unemployment. 

4

2

1

5

3

0.6

0.8

0.7

0.9

f
o
%

P
D
G

low 

Graph A25:  Export market shares and CA balance
Finland

The  current  account  balance  has  stabilized 
since  2011  at  a  moderate  deficit  level, 
reflecting  that  imports  have  adjusted  to 
decreased  exports.  At  the  same  time  the 
share  of  investment  to  GDP  has  decreased 
to  historically 
levels.  The  net 
international  investment  position  is  in  a 
small  surplus  position.  There  have  been 
substantial  accumulated  losses  in  export 
market  shares  including  annual  losses  all 
years since 2008. In 2013 and 2014 the loss 
was  less  severe  than  in  earlier  years,  but  at 
the  same  time  most  other  EU  countries 
already experienced moderate export market 
share  gains.  These  developments  indicate 
difficulties  in  the  economic  restructuring 
process  that  followed  the  decline  in  of  the 
previously successful manufacturing industries, such as electronics and forestry. Although the 
indicator for the change in nominal ULC is now below its threshold, the cumulative loss of 
cost  competitiveness  remains  large.  The  private  sector  debt-to-GDP  ratio  remains  elevated, 
mostly due to persistently high corporate debt, although the net credit flow towards the private 
sector  almost  came  to  a  halt  in  2014  despite  favourable  credit  conditions.  As  regards 

CA balance
Total export market share (rhs)
Goods export market share (rhs)
Services export market share (rhs)

05 06 07 08 09 10 11 12 13 14

Source:  Eurostat

0.1

0.2

0.3

0.4

0.0

0.5

-1

-2

-3

%

0

)

(

38 

 
 
 
 
 
 
 
households,  house  prices  declined  moderately  in  2012-2014,  correcting  previous  increases 
and thus limiting the risks to financial stability. The unemployment rate is below the threshold 
but  is  increasing  and  is  now  above  the  2009-10  levels.  Also  youth  unemployment  has 
increased. 

Overall,  the  economic  reading  highlights  issues  relating  to  both  price-  and  non-price 
competitiveness in a context of restructuring. Therefore, the Commission finds it useful, also 
taking  into  account  the  identification  of  an  imbalance  in  February,  to  examine  further  the 
persistence of imbalances and their unwinding. 

the  Commission  concluded 

that  Sweden  experienced 
Sweden:  In  February  2015, 
macroeconomic 
involving  household  debt,  coupled  with 
inefficiencies  in  the  housing  market.  In  the  updated  scoreboard,  a  number  of  indicators  are 
above  their  respective  indicative  thresholds,  namely  the  current  account  surplus,  losses  of 
export market shares, house prices and private sector debt.  

imbalances,  particularly 

70

50

40

60

90

80

140

130

120

150

160

f
o
%

P
D
G

savings.  The  net 

Graph A26:  Households' debt and House Price Index
Sweden

The current account surplus remains slightly 
above the threshold reflecting primarily high 
private 
international 
investment  position  has  been  improving 
rapidly but still shows a small deficit. Export 
market  shares  losses  stay  well  above  the 
threshold,  but  losses  have  decelerated  since 
2013.  The  losses  can  be  linked  to  weak 
global  demand.  Unit  labour  cost  growth  is 
contained  and  the  real  effective  exchange 
rate  depreciated  in  2014.  The  high  level  of 
private  debt  continues  to  deserve  attention. 
Corporate  indebtedness  started  to  increase 
again  after  having  stabilised  at  high  levels. 
After  introducing  a  loan-to-value  cap  on 
mortgages in 2010, household credit growth 
temporarily  slowed  down  and  household 
debt stabilised. However, since then household debt has started to increase again and  house 
prices have been very dynamic since mid-2013 and growth was above the threshold in 2014 
with  potential  risks  for  macro-economic  stability.  Housing  supply  is  constrained  and  on  the 
demand side, house prices and household indebtedness are pushed up through a debt-biased 
taxation,  exceptionally  low  mortgage  interest  rates  and  a  lack  of  amortisation  requirements. 
Bank  risks  appear  however  contained  as  the  quality  of  their  assets  as  well  as  profitability 
remain high although capital buffers are relatively low compared to the size of loan portfolios. 

Deflated House Price Index (rhs)

Source:  Eurostat

Households debt

0
0
1
=
5
0
0
2

110

100

08

11

14

06

07

10

12

13

09

80

90

30

10

60

20

70

0

Overall,  the  economic  reading  highlights  issues  related  to  external  competitiveness.  high 
private debt and the developments in the housing sector. Therefore, the Commission finds it 
useful,  also  taking  into  account  the  identification  of  an  imbalance  in  February,  to  examine 
further the persistence of imbalances or their unwinding. 

United  Kingdom:  In  February  2015,  the  Commission  concluded  that  the  United  Kingdom 
was experiencing macroeconomic imbalances, which require policy action and monitoring, in 
particular  involving  risks  related to the high level of household indebtedness, also linked to 
structural  characteristics  of  the  housing  market.  In  the  updated  scoreboard,  a  number  of 

39 

 
 
 
 
 
 
 
 
 
indicators  are  beyond  the  indicative  threshold,  namely  the  current  account  deficit,  losses  in 
export market shares, house prices, private sector debt and government debt.  

international 

investment  position 

The  current  account  deficit  continued  to 
increase  in  2014,  driven  by  a  widening 
primary  income  deficit,  and  the  three-year 
indicator  is  now  beyond  the  threshold.  The 
net 
is 
negative  and  has  deteriorated  relatively 
rapidly in the last few years but is still well 
within the threshold level. The accumulated 
losses of market shares was reduced in 2014 
on  the  back  of  an  annual  gain  but  remains 
above  the  threshold.  While  unit  labour  cost 
growth has been moderate and stable the real 
effective  exchange  rate  has  appreciated,  in 
particular  in  2014.  Private  sector  debt-to-
GDP 
is  gradually  declining,  driven  by 
nominal  growth,  but  remains  overall  high. 
House  prices  continue  to  increase  and  the 
growth rate was beyond the threshold in 2014. Nevertheless, a notable feature of the past two 
years  is  that  rising  house  prices  have  not  been  reflected  in  rises  in  household  indebtedness. 
High general government debt remains a concern. Employment continues to grow at healthy 
rates and youth unemployment and the NEET rate have decreased.  

Overall,  the  economic  reading  highlights  issues  relating  to  the  housing  market  and  the 
external  side  of  the  economy.  The  Commission  finds  it  useful,  also  taking  into  account  the 
identification of imbalances in February, to examine further the persistence of imbalances or 
their unwinding.  

40 

 
 
 
Table 1.1: MIP Scoreboard 2014

Year
2014

Current 
account 
balance - % of 
GDP 
(3 year average)

Thresholds

-4/6%

Net 
international 
investm ent 
position 
(% of GDP)

External im balances and com petitiveness
Real effective 
exchange rate - 
42 trading 
partners, HICP 
deflator 
(3 years % 
change)
±5% (EA)
±11% (Non-EA)

Export m arket 
share - % of 
w orld exports
(5 years % 
change)

-35%

-6%

BE

BG

CZ

DK

DE

EE

IE

EL

ES

FR

HR

IT

CY

LV

LT

LU

HU

MT

NL

AT

PL

PT

RO

SI

SK

FI

SE

UK

-0.1

0.9

-0.5

6.9

6.9

-0.5

1.8

-2.6

0.7

-1.0

0.5

0.8

-4.9

-2.5

1.3

5.8

2.7

2.6

10.9

1.8

-2.3

0.0

-2.1

5.1

1.0

-1.5

6.5

-4.3

57.2

-73.4

-35.6

47.0

42.3

-43.6

-106.7

-124.1

-94.1

-19.5

-88.6

-27.9

-139.8

-60.9

-46.4

36.0

-73.8

39.5

60.8

2.2

-68.3

-113.3

-57.2

-43.7

-69.4

-0.7

-6.5

-25.3

-0.5

-2.6

-10.0

-1.2

-0.3

4.7

-3.5

-5.6

-1.0

-1.2

-0.9

0.2

-1.4

0.4

1.4

0.5

-7.0

0.0

0.8

1.9

-1.3

-1.8

-1.1

1.2

1.3

2.7

-3.7

10.2

-10.7

6.7

-5.0

-17.3

-8.3

24.5

-6.1

-17.5

-11.5

-13.1

-18.0

-14.0

-26.7

9.9

35.3

11.2

-14.9

-18.2

-11.0

-15.7

4.8

-4.7

21.5

-11.8

3.2

-24.0

-9.8

-8.7

9% (EA) 
12% (Non-EA)

5.6

12.5p

3.8

5.1

7.6

13.0

-2.2

-11.6p

-4.1p

4.8

-5.9

3.6

-7.7p

12.9

8.3

7.6

6.7

7.0

5.4p

7.8

2.5p

-2.3e

2.3p

-0.2

2.2

8.0

7.1

1.9

6%

-1.1p

1.5p

1.8

3.1

1.5p

12.8

11.1

-4.9e

0.1

-1.6

-2.0p

-4.6p

0.3p

5.1

6.3

3.7

3.1

2.6

-0.5

1.4

1.1

3.6

-3.6p

-6.6

1.5

-1.9

8.6

8.3

Nom inal unit 
labour cost 
index 
(2010=100)
(3 years % 
change)

House price 
index 
(2010=100), 
deflated 
(1 year % 
change) 

Private sector 
credit flow , 
consolidated 
(% of GDP)

Internal im balances
General 
governm ent 
gross debt 
(% of GDP)

Private sector 
debt, 
consolidated 
(% of GDP)

Unem ploym ent 
rate 
(3 year average)

Total financial 
sector 
liabilities, 
non-
consolidated
(1 year % 
change)

Activity rate - % 
of total 
population aged 
15-64
(3 years change in 
p.p.)

New  em ploym ent indicators 1
Long-term  
unem ploym ent 
rate - % of active 
population aged 
15-74
(3 years change in 
p.p.)

Youth 
unem ploym ent 
rate - % of active 
population aged 
15-24
(3 years change in 
p.p)

133%

60%

14%

1.0

-0.3

1.8

1.7

1.1

6.4

13.7

-2.7

-7.1

3.3

0.3

-0.9

-8.5

-11.9

-1.2

0.5

-0.5

7.8

181.4

124.3

72.7

222.8

100.4

116.1

263.3

130.5

165.8

143.2

120.6

119.3

348.3

96.4

52.5

342.2

91.3

146.4

-1.6p

228.9p

0.2

4.7

-8.7

-2.4

-4.6

3.9

0.4

6.5

3.4

127.1

77.9

189.6

62.2

100.1

76.2

150.0

194.4

157.7

106.7

27.0

42.7

45.1

74.9

10.4

107.5

178.6

99.3

95.6

85.1

132.3

108.2

40.6

40.7

23.0

76.2

68.3

68.2

84.2

50.4

130.2

39.9

80.8

53.5

59.3

44.9

88.2

10%

8.2

12.2

6.7

7.0

5.2

8.7

13.0

26.2

25.1

10.1

16.9

11.8

14.6

12.6

12.0

5.7

9.6

6.2

6.8

5.3

9.8

15.4

6.9

9.6

13.8

8.2

8.0

7.2

16.5%

-0.2%

4.9

7.2

4.4

6.6

4.2

12.2

16.0

-7.6

-1.9

5.4

0.9

-0.7

0.7

10.4

16.3

21.5

8.5

5.8

8.2p

-1.5

0.6

-6.1

1.1

-0.4

7.0

8.7

13.4

4.4

1.0

3.1

3.0

-1.2

0.4

0.5

0.6

0.1

0.3

1.3

2.0

1.8

0.8

1.8

2.3

2.9

4.6

4.5

0.9

0.8

2.2

-0.4

1.6

0.6

1.6

0.5

1.6

1.2

0.5%

0.8

0.6

0.0

-0.1

-0.6

-3.8

-2.0

10.7

4.0

0.6

1.7

3.5

6.1

-4.1

-3.2

0.3

-1.5

-0.4

1.3

0.3

0.2

2.2

-0.1

1.7

0.0

0.2

0.0

-0.5

0.2%

4.5

-1.2

-2.2

-1.6

-0.8

-7.4

-5.2

7.7

7.0

1.5

8.8

13.5

13.6

-11.4

-13.3

5.9

-5.6

-1.5

2.7

1.4

-1.9

4.5

0.1

4.5

-4.0

0.4

0.1

-4.4

Flags: e: estimated. p: pro visio nal. 

No te: 1) See page 2 o f the A M R 2016. 2) Internatio nal investment po sitio n o f LU has been revised do wnwards fo llo wing the revised treatment o f Euro  bankno tes in natio nal B alance o f payments/Internatio nal investment po sitio n statistics. 3) Ho use price index e = so urce NCB  o f EL.
So urce: Euro pean Co mmissio n, Euro stat and Directo rate General fo r Eco no mic and Financial A ffairs (fo r Real Effective Exchange Rate), and Internatio nal M o netary Fund

41 

 
 
 
t
s
o
c
r
u
o
b
a

l

t
i
n
u

l

i

a
n
m
o
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=
0
1
0
2
(
x
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d
n

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)
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g
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a
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%
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r
a
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y
0
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(

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a
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c
n
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A
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%
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r
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0
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(

x
e
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c
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r
p
e
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H

l

i

a
n
m
o
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-

)
0
0
1
=
0
1
0
2
(

)
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g
n
a
h
c
%
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r
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y
3
(

n
o
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f

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%

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t
b
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d
r
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s
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a
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n
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f

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l

r
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-
n
o
n

)
y
t
i

u
q
e
-
o

t
-
t
b
e
d
%

(

Table 2.1: Auxiliary indicators, 2014

P
D
G

l

a
e
R

)
e
g
n
a
h
c
%

r
a
e
y
1
(

1.3

1.5

2.0

1.1

1.6

2.9

5.2

0.7p

1.4p

0.2

-0.4

-0.4

l

a
t
i
p
a
c
d
e
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i
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o
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G

)

P
D
G

f

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%

(

n
o

i
t
a
m
r
o
f

23.3

21.1

25.0

18.7

20.1

25.2

19.3

11.6p

19.6p

21.7

18.6

16.6

-2.5p

11.5p

2.4

3.0

4.1

3.7

3.5

22.9

18.9

18.6

21.7

18.9

1.0p

18.2p

0.4

3.3

0.9e

2.8p

3.0

2.5

-0.4

2.3

22.4

19.6

14.9e

22.0p

19.6

20.9

20.3

23.5

c

i
t
s
e
m
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f

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%

(

D
&
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r
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p
x
e

)

P
D
G

na

0.8p

2p

3.08ep

2.84ep

1.46p

na

0.83p

na

2.26p

0.8

na

na

0.68p

1.02p

na

1.4

0.85p

na

2.99ep

na

na

na

na

0.9

3.2

3.16p

Year 
2014

BE

BG

CZ

DK

DE

EE

IE

EL

ES

FR

HR

IT

CY

LV

LT

LU

HU

MT

NL

AT

PL

PT

RO

SI

SK

FI

SE

UK

1.72ep
Flags: e: estimated. p: pro visio nal. na: no t available. 

16.9

2.9

l

l

a
t
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p
a
c
s
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t
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g
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i

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P
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%

(

t
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x
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P
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x
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R

i

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A
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-
e
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a
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s
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t
r
a
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3
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e
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c
e

)
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a
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%
s
r
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y
5
(

-0.1

-79.7

-3.5

216.0

3.5

1.4

7.8

7.5

2.2

3.8

-0.7

1.4

-0.8

0.9

2.2

-3.7

1.2

6.3

3.5

6.0

4.5

10.6

1.8

0.4

2.0

2.2

6.5

1.1

-0.8

6.1

-5.3

19.0

-7.1

0.7

-6.7

-11.0

-477.2

132.3

94.7

38.1

na

61.1

128.4

31.4

28.8

3.5

2.4

1.1

0.2

6.0

36.0

0.7

2.3

0.3

6.7

0.6

-5.1

2.7

0.7

92.7

76.3

46.6

40.1

100.9

385.5

12.2

55.7

41.8

7.6

24.8

54.4

39.0

-2204.6

200.0

6369.7

53.3

-325.7

41.5

20.1

37.2

104.4

29.8

39.2

27.0

46.2

54.3

na

9.3

1.6

5.3

1.9

3.1

5.4

1.9

2.0

0.0

5.5

-0.6

1.6

220.5

1964.6

547.8

80.2

50.7

69.5

41.9

31.6

65.6

53.1

83.6

76.7

-3.9

-5.7

-4.1

0.0

-2.9

-2.1

-2.8

-3.2p

-2.9p

-2.5

-4.0

-2.6

-4.2

-5.9

-4.5

-6.1

-15.8

-1.6p

-3.0

-2.6

-3.5e

-1.4p

-4.1

-4.3

-2.4

-1.4

-0.7

710.3

-5.9p

-0.1

-2.9

-10.1

-1.4

-0.1

3.1

-1.8

-5.6

-0.6

-0.7

-1.5

0.4

0.0

-1.3

-0.1

0.8

-7.2

0.7

1.3

1.6

-1.7

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0.4

0.5

2.0

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10.2

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14.0

1.5

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-2.1

33.0

0.3

-11.9

-5.4

-7.2

-12.4

-8.1

-21.7

17.3

44.5

18.8

-9.1

-12.6

-5.0

-10.0

12.0

1.8

29.8

-5.8

10.2

-18.8

-3.6

-2.5

)
e
g
n
a
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%
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r
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(

e
d
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s
m
r
e
T

-3.0

3.3

-1.4

2.2

-2.6

0.2

-3.7

1.4p

-7.8p

-1.6

0.8

-4.5

0.4p

0.0

-0.8

0.9

-1.1

1.7

-1.8p

-3.0

-1.8

0.4e

4.5p

-4.5

-3.5

-3.4

-0.6

3.8

e
m
u
o
v

l

)
e
g
n
a
h
c
%

r
a
e
y
1
(

n

i

e
r
a
h
s

t
e
k
r
a
m

t
r
o
p
x
E

2.2

-3.3

5.7

-0.6

0.8

-1.4

8.9

4.3p

1.9p

-0.8

3.1

-0.1

-3.7

-0.1

-0.2

3.6

4.4

-3.5

0.8p

-1.1

3.2

0.7e

4.9p

2.6

0.4

-3.9

0.3

-1.4

y
t
i
v

i
t
c
u
d
o
r
p
r
u
o
b
a
L

)
e
g
n
a
h
c
%

r
a
e
y
1
(

1.0

1.2p

1.4

0.3

0.7

2.1

3.4

0.5p

0.4p

-0.1

-3.0

-0.5

22.6

78.3p

13.8

27.6

13.0

68.9

-1.5

10.3p

11.7p

20.3

26.4

21.0

6.0

54.1

-2.2

8.2

-5.8

40.5

-3.9

-5.5

-4.2

1.7

4.8

4.6

-0.6p

19.3p

-13.0

3.8

1.0

1.5

-0.9

-1.0

1.2p

-0.5

1.6p

-0.5e

1.7p

2.5

1.1

0.4

0.9

0.7

82.7

36.8

36.6

26.5

27.7

17.2p

22.9

20.0p

4.9e

72.7p

21.2

19.7

29.9

24.9

21.8

53.9

11.2

17.8

10.0

10.3

-0.2

4.1

-1.0

-9.3

46.6

3.0

4.3

10.1

5.4

6.3

2.9p

-2.7p

1.0

4.9

9.3p

35.0

2.1

-27.1e

-22.3

-4.0

-17.7p

-12.4p

-8.7p

16.6

7.5

14.2

-2.2

5.3

-11.6

16.8

-6.8

-5.0

-8.9

-17.6

-0.4

3.2

16.8

15.8

5.9

1.6

3.2

4.0

5.9

3.2

2.2

1.0p

4.4p

5.9

na

4.7

3.3p

2.3

2.5

3.4

1.6

2.7

207.6

137.5

85.1

227.6

108.9

135.3

284.2

130.5

185.5

180.9

141.9

121.2

349.8

104.7

56.7

402.7

116.5

221.3

176.9

452.2

503.5

173.6

395.5

370.6

78.2

1083.8

444.9

384.3

460.6

754.3

116.8

642.6

445.3

63.6

123.0

42.0

3.1p

240.7p

118.9p

4.3

2.4

2.3e

na

2.2

2.6

5.6

4.1

3.8

147.1

81.4

206.2

63.3

110.1

78.9

172.9

234.8

161.3

197.3

287.3

340.3

388.9

448.1

756.8

368.4

196.0

765.1

No te: 1) Net external debt o f Luxembo urg has been revised do wnwards fo llo wing the revised treatment o f Euro bankno tes in natio nal B alance o f payments/Internatio nal investment po sitio n statistics. 2) Ho use price index e = so urce NCB fo r EL. 3) Official transmissio n deadline fo r 2014 data o n
Gro ss do mestic expenditure o n R&D is 31 Octo ber 2015 while data were extracted o n 26 Octo ber 2015.
So urce: Euro stat, Directo rate General fo r Eco no mic and Financial A ffairs(fo r Real Effective Exchange Rate) and Internatio nal M o netary Fund data, WEO (fo r wo rld expo rts series)

42 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table 2.1 (continued): Auxiliary indicators, 2014

Year
2014

Em ploym ent 
rate
(1 year % 
change)

Activity rate - % 
of total 
population 
aged 15-64
(%)

Long-term  
unem ploym ent 
rate - % of 
active 
population 
aged 15-74
(%) 

Youth 
unem ploym ent 
rate - % of 
active 
population 
aged 15-24
(%)

Young people neither in 
em ploym ent nor in 
education and training - 
% of total population 
aged 15-24

%

3 years 
change in p.p

BE

BG

CZ

DK

DE

EE

IE

EL

ES

FR

HR

IT

CY

LV

LT

LU

HU

MT

NL

AT

PL

PT

RO

SI

SK

FI

SE

0.3

0.4p

0.6

0.8

0.9

0.8

1.7

0.1p

0.9p

0.3

2.7

0.1

-1.9p

-1.3

2.0

2.5

4.6

4.5

-0.2p

0.9

1.7p

1.4e

1.1p

0.6

1.4

-0.8

1.4

67.7

69.0

73.5

78.1

77.7

75.2

69.8

67.4

74.2

71.4

66.1

63.9

74.3

74.6

73.7

70.8

67.0

66.3

79.0

75.4

67.9

73.2

65.7

70.9

70.3

75.4

81.5

4.3

6.9

2.7

1.7

2.2

3.3

6.7

19.5

12.9

4.4

10.1

7.8

7.7

4.7

4.8

1.7

3.7

2.7

3.0

1.5

3.8

8.4

2.8

5.3

9.3

1.9

1.5

UK

2.2
Flags: b: break in time series. e: estimated. p: pro visio nal. na: no t available. 

76.7

2.3

23.2

23.8

15.9

12.6

7.7

15.0

23.9

52.4

53.2

24.2

45.5

42.7

36.0

19.6

19.3

22.3

20.4

11.8

12.7

10.3

23.9

34.7

24.0

20.2

29.7

20.5

22.9

16.9

12.0

20.2

8.1

5.8

6.4

11.7

15.2

19.1

17.1b

11.4b

19.3

22.1

17.0

12.0

9.9

6.3

13.6

10.5

5.5

7.7

12.0

12.3

17.0

9.4

12.8

10.2

7.2

11.9

0.2

-1.6

-0.2

-0.5

-1.1

0.1

-3.6

1.7

-1.1b

-0.9b

3.1

2.4

2.4

-4.0

-1.9

1.6

0.4

0.3

1.2

0.4

0.5

-0.3

-0.5

2.3

-1.0

1.8

-0.3

-2.3

People at risk of poverty 
or social exclusion -
% of total population

People at risk of poverty 
after social transfers -
% of total population

Severely m aterially 
deprived people -
% of total population

People living in 
households w ith very 
low  w ork intensity -
% of total population 
aged 0-59

%

21.2

40.1b

14.8

17.8b

20.6

na

na

36.0

29.2

18.6

29.3

28.1p

27.4

32.7

27.3

19.0

31.1

23.8

16.5

19.2

24.7

27.5

40.2

20.4

18.4

17.3

16.9

na

3 years 
change in p.p

0.2

-9.0b

-0.5

-1.1b

0.7

na

na

5.0

2.5

-0.7

-3.3

-0.1p

2.8

-7.4

-5.8

2.2

0.1

1.7

0.8

0.0

-2.5

3.1

-0.1

1.1

-2.2

-0.6

0.8

na

%

15.5

21.8

9.7

11.9b

16.7

na

na

22.1

22.2

13.3

19.4

19.6p

14.4

21.2

19.1

16.4

14.6

15.9

11.6

14.1

17.0

19.5

25.4

14.5

12.6

12.8

15.1

na

3 years 
change in p.p

0.2

-0.4

-0.1

-1.1b

0.9

na

na

0.7

1.6

-0.7

-1.5

0.0p

-0.4

2.2

-0.1

2.8

0.8

0.3

0.6

-0.4

-0.7

1.5

3.2

0.9

-0.4

-0.9

1.1

na

%

5.9

33.1b

6.7

3.2

5.0

6.2p

na

21.5

7.1

4.8

13.9

11.5p

15.3

19.2

13.6

1.4

23.9

10.2

3.2

4.0

10.4

10.6

26.3

6.6

9.9

2.8

0.7

na

3 years 
change in p.p

%

3 years 
change in p.p

0.2

-10.5b

0.6

0.6

-0.3

-2.5p

na

6.3

2.6

-0.4

-1.3

0.3p

3.6

-11.8

-5.4

0.2

0.8

3.6

0.7

0.0

-2.6

2.3

-3.1

0.5

-0.7

-0.4

-0.5

na

14.6

12.1

7.6

12.1

10.0

na

na

17.2

17.1

9.7

14.7

12.0p

9.7

9.6

8.8

6.1

12.2

9.8

10.2

9.1

7.3

12.2

6.4

8.7

7.1

10.0

6.4

na

0.8

1.1

1.0

0.4

-1.2

na

na

5.2

3.7

0.3

-1.2

1.6p

4.8

-3.0

-3.9

0.3

0.0

0.9

1.3

0.5

0.4

3.9

-0.3

1.1

-0.6

0.0

-0.5

na

No te: 1) Yo ung peo ple neither in emplo yment no r in educatio n and training: fo r ES change in the classificatio n o f no n-fo rmal educatio n activities; fo r FR 2014 data are further impacted fro m the changes in the questio nnaire intro duced in 2013 and inclusio n o f French o verseas
departments (DOM ). 2) EE, IE and UK: Official transmissio n deadline fo r 2014 data o n P eo ple at risk o f po verty o r so cial exclusio n is 30 No vember 2015 while data were extracted o n 26 Octo ber 2015.
So urce: Euro pean Co mmissio n, Euro stat

43