EU again worried about Sweden household debt as it carried out a compulsory periodic test of EU economiesTuesday, 14 February 2012
Swedish economy is great when compared to many EU economies but there
is a time bomb waiting to explode that is not focused on when various
forms of analysis are being made – Swedish real estate prices and
household debts is that time bomb.
We have done our bit here on this network in highlighting this premise
but as it stands, there is still huge worries about this Swedish micro
economic sector such that the likes of the EU once again has called for
Sweden to do something about this deficiency and as soon as possible.
The European Commission begins detailed examination of Sweden and
eleven other European countries in relation to the very large
macroeconomic imbalances in the region.
The danger for Sweden stands clear, increasing household debt, "which
is now at high levels despite a slowdown in credit growth."
"This reflects very rapid increase in house prices over the past 15
years, which has only recently begun to stabilize, "the Commission said
in a statement on Tuesday. But as the Swedish central bank might lower
interest rates and commercial banks bent on increasing their own
lending interest rates as well as high prices Sweden’s over valued
homes it remains worrying as to how this problem could be tackled.
The other eleven countries whose economies are meticulously being
examined are Belgium, Bulgaria, Cyprus, Denmark, Finland, France,
Italy, Slovenia, Spain, Britain and Hungary.
EU countries that already receive emergency loans, such as Greece,
Ireland, Portugal and Romania are already placed under close monitoring
of their support program. Latvia is also monitored more closely in the
wake of the country's aid program.
The new EU rules on economic governance include not only tougher budget
rules but also a macroeconomic surveillance. On Tuesday, the Commission
presented the first "warning report" that identifies the EU countries
that require closer scrutiny.
The Commission's detailed investigation may lead to concrete
recommendations for each EU country to improve. By extension, if the
recommendations are ignored and the situation becomes very serious, the
EU may ultimately impose sanctions on the euro area country (ies).
"This crisis that has the structure to macroeconomic imbalances poses
risks to financial stability, economic outlook and the country's
prosperity, "said economics commissioner Olli Rehn in a press
conference in Strasbourg.
Belgium is examined for loss of shares in the export markets that has
led to its deteriorating current account balance and reduced
competitiveness. The level of private debt should be viewed together
with the high public debt.
Denmark is examined for its household indebtedness after the rapid price rise in house prices.
Finland has lost shares in its export market and private sector debt is increasing, mainly because of the mortgages.
France's trade balance has gradually deteriorated as well as Italy
which is being examined for a loss of competitiveness since the
mid-1990s. Public debt is a cause for concern, especially given the
poor growth and structural weaknesses.
Spain is undergoing an adjustment to large external and internal imbalances in the housing and credit boom.
Britain has lost export market shares. The high level of private debt
in the country, particularly with the mortgages is to be seen together
with the country’s weak public finances.
Hungary is being examined for high public and private debt. It indebtedness to foreign countries is the highest in the EU.
By Scancomark.se Team
Back to top