EU probing trade, debt imbalances among members

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FRANKFURT, Germany (AP) — The European Union said Tuesday it is looking more deeply into the economies of 12 of its 27 member states to check whether they have excessive debt, trade deficits or business costs.

Economists say such imbalances are part of the reason for the eurozone’s debt crisis since they can be signs of underlying problems with an economy — and contribute to governments building up too much debt. The review is part of efforts to prevent another crisis.

One of the countries under review is heavily indebted Italy, which was cited for loss of export markets and deterioration in its business environment since the mid-1990s. France, the largest country under review and the second-largest of the countries that use the euro, was also cited for losing export competitiveness.

Britain, which doesn’t use the euro, was included because it has lost 24 percent of its share of world export markets over the past five years and has high levels of household debt among mortgage holders due to increases in house prices.

The other countries are Belgium, Bulgaria, Cyprus, Denmark, Finland, Hungary, Slovenia, Spain, and Sweden.

If in-depth study shows corrective measures are warranted, the EU can ask governments to take action to reduce the imbalances.

The broader study of countries’ economies was prompted because the European Union’s rules against piling up too much government debt — aimed at supporting the euro currency shared by 17 of the EU’s members — proved an insufficient warning that a government debt crisis was coming. Several countries now in serious trouble — in particular, Spain and Ireland — stayed within debt limits for years.

The expanded review now focuses on whether a country’s economy is performing well across a range of indicators. It looks at whether the country is able to compete on exports — one key to a solid economy and state finances — and whether debt is building up in the private sector as well as on government books. It also looks at whether wage costs and house prices are rising excessively.

Countries that have been bailed out by the EU and International Monetary Fund — Greece, Portugal, Ireland, and Romania — were not included because their economies are already being tracked as part of their rescue plans.