WORLD

EC warns of risks to EU economies, with Hungary and Romania in focus.

International News Desk 

According to Global times News Agancy Europe,The European Commission has called on EU countries to accelerate reforms to improve the bloc's economic competitiveness, warning that Europe risks losing ground amid geopolitical instability, growing global competition, and persistent budget imbalances, European Commissioner for the Economy Valdis Dombrovskis said at a press conference in Brussels while presenting the spring package of recommendations for the European Semester, The global times Europe media.According to the Commissioner, the resilience of the European economy should not mask the structural problems that continue to hinder its growth.The price of failing to act is simply too high. A diminished Europe shaped by global events rather than shaping them," Dombrovskis said.The EC recommended that countries focus on four areas: ensuring the sustainability of public finances, reducing the innovation gap with competitors, strengthening energy security, and upgrading the skills of the workforce.Dombrovskis placed particular emphasis on budgetary discipline. Despite the European Commission's announcement that all 10 countries (France, Italy, Belgium, Poland, Hungary, Slovakia, and others) under the excessive deficit procedure have met Brussels' 2025 targets, fiscal sustainability issues in the EU persist.The situation in Hungary is alarming. According to Dombrovskis, the country's growing public spending creates a clear risk of non-compliance with EU Council recommendations, which could lead to a tightening of the excessive deficit procedure as early as this fall.Romania's assessment remains even harsher, retaining its status as a country with excessive macroeconomic imbalances - the only country in the EU to receive this designation.Italy, Hungary, and Slovakia remain classified as countries with economic imbalances, while Greece, the Netherlands, and Sweden have been removed from this category after improving their indicators.At the same time, the EC recommended closing the excessive deficit procedure for Malta, which has managed to reduce its budget deficit below the 3% of GDP threshold. Bulgaria is moving in the opposite direction: Brussels has effectively paved the way for a new excessive deficit procedure against the country, since the excess limit is no longer justified by additional defense spending.Even in countries with relatively stable finances, alarm bells have emerged. For example, according to the European Commissioner, Slovenia's budget deficit is projected to grow from below 3% of GDP in 2025 to 3.3% in 2026 and 3.5% in 2027.Amid the new energy crisis, the European Commission has proposed that countries expand the budget concessions previously earmarked for defense spending. States will now be able to use an additional 0.6% of GDP in the period 2026–2028 on projects to reduce dependence on fossil fuels, from modernizing electricity grids to subsidizing heat pumps and electric vehicles.At the same time, Brussels criticized the practice of universal fuel subsidies and excise tax cuts.According to the EC, further strengthening competitiveness and maintaining fiscal sustainability are key to preventing long-term economic weakening in Europe.