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The economic crisis is being exacerbated by the strong trade imbalances within the EU; while some countries run up a hefty export surplus, others suffer from a deficit. The European Commission monitors the situation and issues reform recommendations on the basis of its analysis, but is there enough scrutiny over this?
Many experts see the macro-economic imbalances as the underlying cause of the eurozone's troubles. The Commission has set up a scoreboard of 11 indicators to keep tabs of how countries are doing. If it becomes obvious there is a problem, then the Commission carries out an in-depth review and can recommend measures to Member States to correct imbalances. On 10 April, the Commission warned that 13 Member States showed signs of imbalances [view].
About macro-economic imbalances
Imbalances occur when some countries within an economic area are more competitive than others. Some countries export much more than they import (in the EU for example Germany, Finland and the Netherlands), while others have large deficits because they import much more than they export (countries such as Greece, Portugal and Spain). These latter countries have to borrow money, often from countries that have an export surplus.
Why they can be a problem
If imbalances persist over a long period, then countries that import more than export might not be able to pay off their debt. They will then have to embark on budget cuts as the loans are no longer forthcoming, while bailout packages could be needed to salvage a financial system now burdened by bad debts.
The need for scrutiny
Based on the scoreboard and the subsequent analysis, the Commission proposes reform measures to countries that run large surpluses or deficits. As these measures greatly affect people's lives, the economic committee believes that Parliament should be more closely involved to scrutinise the process.
Next steps
MEPs will debate the issue with Commission representatives on Thursday 18 April during the plenary session.