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The Commission published in-depth reviews (IDRs) of macroeconomic imbalances in 13 Member States: “Our transformed economic governance enables us to address macroeconomic imbalances pre-emptively and to create the foundations for sustainable growth,” said Olli Rehn, Commission Vice-President for Economic and Monetary Affairs and the Euro.
The Commission also expects those eleven countries with imbalances that are not found to be excessive, including the United Kingdom 
IDR_UK.pdf to take the findings of the IDRs into account. For these countries, the Commission will put forward encompassing policy recommendations on 29 May for the correction of existing imbalances and the prevention of new ones.
We must look forward to the howls of "denial" from Conservative MPs.
But what exactly can our MPs deny? The Commission’s dispassionate analysis makes very uncomfortable reading as sterling wobbles inversely with every bit of good news from the euro area. If the euro area collapses, it is economic death for the UK. Alternatively, if the euro area recovers then the attractions of an alleged sterling 'safe haven' look quite fragile.
The Commission’s main observations are that “the challenges identified in the 2012 IDR, namely the high levels of household debt and the deterioration in external competitiveness, remain valid.” The shakiness of sterling suggests that this is the aspect that must be fixed – and soon – or the post-War decline in sterling may take another ratchet-like move downwards.
“As regards external competitiveness, the UK experienced a large drop in export market shares from 2007 to 2010. The trade balance has been negative since 1997, mainly as the result of a chronic deficit in goods trade. Nevertheless, export volumes have been a modest net driver of growth in the UK economy in the crisis period. Exports were 3.3% higher in 2011 than 2007, while total GDP remained below its pre-crisis peak. External performance in 2012 was worse than anticipated, although the current account is expected to continue to move towards a more balanced position in the medium term. The deterioration in the UK's current account balance in 2012 was mainly due to weaknesses in external demand and foreign income, in particular from European countries, unfavourable developments in oil trade, and buoyant imports despite the economic recession.”
The European Commission’s analysis argues that the UK’s net external position is still 'sustainable' and it 'expects' the current account to move towards balance. However, it makes devastating criticisms of the UK’s competitiveness:
These problems have not been addressed for decades, and cannot be changed quickly. 'Services' earnings (with a major contribution from the City of London) have been of huge benefit for decades - hitting a massive 4.7% of GDP in 2011. But the path of European reform, quite apart from the UK’s own policies to rein back the financial sector, suggest that a renewed boom is the City’s earnings may be some way off. So the onus is being thrown back onto a traded goods sector that is steadily losing market share.
However, there is not a word in the Commission analysis of the UK about the obvious implication flowing from the whole 'Macro Imbalance Procedure' exercise to improve the competitiveness of all the EU’s Member States. That general improvement is bad news for the relative position of any who slip behind. Moreover, it is not just competitiveness within the EU market - the other EU members will become even more formidable competitors throughout the global market place.
If these UK does not address these problems swiftly and comprehensively, what will happen to the current account deficit? How long will it remain sustainable?
This article was writtten for British Influence in the EU link to original article