Press releases

New EPC economic index compares economic ‘health’ of EU Member States


16 June 2010

The EPC’s innovative index: the European Economic Sustainability Index (EESI), assesses and compares EU Member States’ economic sustainability.

In the run-up to tomorrow’s European Council meeting which will focus on the economic crisis and on Europe’s growth strategy, Europe 2020, the EPC is launching its new index, the European Economic Sustainability Index (EESI), designed to assess and compare the economic sustainability of EU Member States, using short-, medium- and long-term indicators.

The EESI assesses each country according to six domains: deficits, national debt, growth, competitiveness, governance/corruption and the cost of ageing. The results are ranked, and countries are classified as: ‘top’, ‘high’, ‘midfield’, ‘in danger’ and ‘unsustainable’.

As the results below show, Scandinavian EU Member States, together with Estonia as the only New Member State (NMS), top the ranking, and northern/central European countries also perform well. Greece not only comes out bottom, but is very close to being the worst performing economy across all six domains of the index.

Italy has significant long-term economic sustainability problems and Portugal is also performing badly. Spain is clearly under threat. Ireland is also under threat but is doing significantly better than the lowest performers. While outperforming the problem countries of the euro zone, the NMSs which needed IMF/EU assistance: Hungary, Latvia and Romania, cluster at the bottom.

European Economic Sustainability Index

 

Score

Rank
2010

Group

Rank
2007

Euro?

Sweden

0.55

1

TOP

8

 

Denmark

0.45

2

TOP

4

 

Estonia

0.45

2

TOP

1

Euro 2011

Finland

0.42

4

TOP

4

Euro

Netherlands

0.28

5

HIGH

9

Euro

Germany

0.24

6

HIGH

15

Euro

Luxembourg

0.24

6

HIGH

7

Euro

Austria

0.20

8

HIGH

13

Euro

United Kingdom

0.07

9

MIDFIELD

11

 

Czech Republic

0.05

10

MIDFIELD

17

 

Slovakia

0.03

11

MIDFIELD

10

Euro

Poland

0.02

12

MIDFIELD

15

 

Belgium

-0.01

13

MIDFIELD

22

Euro

Bulgaria

-0.02

14

MIDFIELD

12

 

France

-0.03

15

MIDFIELD

20

Euro

Ireland

-0.08

16

IN DANGER

3

Euro

Slovenia

-0.09

17

IN DANGER

19

Euro

Cyprus

-0.10

18

IN DANGER

23

Euro

Lithuania

-0.13

19

IN DANGER

6

 

Malta

-0.15

20

IN DANGER

21

Euro

Hungary

-0.17

21

IN DANGER

24

 

Romania

-0.19

22

IN DANGER

18

 

Latvia

-0.22

23

IN DANGER

2

 

Spain

-0.23

24

IN DANGER

14

Euro

Portugal

-0.29

25

UNSUSTAINABLE

25

Euro

Italy

-0.38

26

UNSUSTAINABLE

27

Euro

Greece

-0.93

27

UNSUSTAINABLE

26

Euro

The Index plots the changes  between 2007 and 2010, and shows that in comparison to 2007, the Scandinavian countries, Germany, the Netherlands and France have all improved relatively, whereas Latvia, Lithuania, Ireland and Spain all lost ground.

Explaining the rationale for the Index, its designer EPC Chief Economist Fabian Zuleeg said “The unprecedented turmoil in the euro zone and the future uncertainty make it important to understand the medium- to long-term factors which will affect future economic stability and sustainability of EU countries”.

He continued “The implications of the index are clear: Structural reform is necessary in many countries if we wish to avoid future crises. In particular, Greece and Italy, as well as Spain, Portugal and the NMS which have received EU/IMF assistance, Hungary, Latvia and Romania, must carry out reforms which do not only improve public finance, but which also improve governance, competitiveness and productivity and deal effectively with long-term challenges”.

Labour market and pension reform, reform of the delivery of public services, improving the business environment and investing in future growth must all play a significant role.

The EPC intends to review the EESI regularly, every spring when the new Commission forecast is published and potentially also when new data becomes available or in light of significant political developments. This will provide a tool which enables commentators to chart how economic sustainability develops within the EU over the coming years.

For more information, please contact Fabian Zuleeg, EPC Chief Economist on:

+32 286 1191 or e-mail: F.Zuleeg@epc.eu

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