Eleven European Union countries including France, Italy and Britain face high risks to the sustainability of their public finances because even 10 years from now their public debt will still be high, the European Commission said on Monday.
In a fiscal sustainability report, the European Union’s executive arm said Belgium, Ireland, Spain, France, Croatia, Italy, Portugal, Romania, Slovenia, Finland and United Kingdom were all at high risk.
The estimates are based on the Commission’s macroeconomic forecasts for all 28 EU countries from last November that projected key economic indicators two years ahead.
The report did not contain any recommendations, but the commission is due to issue country-specific recommendations at a later date.
The sustainability analysis assumes no policy changes after the two years included in the forecast. It does not include Greece or Cyprus, which are still under bailout programs.
The Commission said there were no short-term fiscal sustainability risks to any EU countries. But it said that for instance in the case of Italy some factors such as gross and net debt, gross financing needs and the amount of non-performing loans, pointed to short-term “challenges”.
It made similar comments about challenges from non-performing loans and other issues facing 15 other countries.
The best performers in terms of fiscal sustainability, with low risks in the short-, medium- and even long-term, were Denmark, Germany, Estonia, Latvia.